• Startup & Investor Resources
  • Recent Posts
  • Search
  • Contact Me

Instigator Blog

Lean Analytics, startups, angel investing, product management and more!

Will You Sacrifice Your Price to Close a Deal?

October 12, 2006 by Ben Yoskovitz

You need to close deals in order for your business to survive. Thank you for stating the obvious…

But invariably when closing deals you’ll have to make concessions. You’ll have to…negotiate.

Price is almost always the #1 issue with customers. Everyone wants a price break. In some industries it’s pratically guaranteed that you’ll negotiate on price. No one buys a car at sticker price. Other industries jack prices up knowing they’re going to be offering big sales or that negotiation is a fact of life.

In service businesses, many vendors will buffer their price quotes/estimates: (a) to cover their asses, and (b) to allow for some wiggle room.

So, how low will you go? How low will you go? How low will you go? Sing it with me!

Selling below cost is a bad move. (This sounds obvious, but it might not always be.) Wasn’t there a Dilbert cartoon where the guy says something like, “They cost us $5.99 to make, but we’ll sell ’em for $3.99…and just sell a ton of them to make up the difference!”

You may run into a prospect that has a ton of appeal. A big name client that would jazz up your client list. The promise of PR that’ll draw some buzz. Or (and this is a classic), the promise of deeper purchasing from that client, “if they could just get it super cheap at the outset…”

Are any of those things worth losing money?

In my experience the answer is “no”.

Lowering your price does the following:

  • It devalues what you offer.
  • It sets expectations with clients that you’ll lower your cost in the future.
  • It ruins your profit margins.
  • It makes it easier for you to lower the price the next time.

I’m not saying, “don’t negotiate.” We all have to, it’s part of being in business.

But the question still stands, “How low will you go?”

(This is the first in a multi-post series on what you’re willing to sacrifice to close a deal. Next: Sacrificing your time.)

Filed Under: Business

Want more content like this?

Signup for free and you'll get new content as soon as it's available. Thanks!

Ben Yoskovitz

Founding Partner at Highline Beta, a hybrid venture studio and VC firm that works with large, ambitious companies to identify new areas of opportunity through internal and external innovation.

Previously I was VP Product at VarageSale and GoInstant (acq. $CRM), and Founding Partner at Year One Labs.

Angel investments include: Breather, Spoiler Alert, SendWithUs and others.

My bio »

Buy Lean Analytics

Lean Analytics

"Lean Analytics is the missing piece of Lean Startup!" - Dan Martell, founder Clarity

Get the book at leananalyticsbook.com

Get updates

I've moved to Focused Chaos a newsletter focused on startups, investing and more. Please visit there to subscribe and get weekly content.

  • Startup & Investor Resources
  • Recent Posts
  • Search
  • Contact Me
Views expressed here are mine and mine alone.

Copyright © 2023 · Built on the Genesis Framework