How To Negotiate Price Effectively
If you’re involved in B2B sales, high ticket B2C sales, or consultative selling; one of the key sales skills you’ll need to learn is how to negotiate price effectively.
Discussing price and money is an important part of the sales process, and one that you do need to handle quite carefully.
In this article, you’ll learn what negotiating on price means, as well as three important strategies to help you learn how to negotiate price effectively.
How To Negotiate Price Effectively
What Does Negotiating On Price Mean?
Before you learn how to negotiate price, it’s important to understand what it fundamentally means.
Negotiation on price is when you and your potential client have a discussion regarding what they should pay for your products or services.
Usually, negotiating on price will happen if:
- They feel they can get a better price elsewhere
- If you haven’t presented enough value or need for them to buy right now
- There hasn’t been enough discussion in regard to pain points of their current situation
- They are using it as a tactic to get the product or service with less of an investment
We’ve identified that there are three key strategies to ensure you come out of a sales deal not feeling ripped off or leaving in a vulnerable position when negotiating on price.
Read on to learn how to negotiate price, and how to implement them into your business and sales process.
Related article: “Just Give Me A Price” – How To Respond Correctly
How To Negotiate Price Tip #1 – Discuss Pain Points
The first tip on how to negotiate price effectively, is find your potential clients pain points, and deep dive into how it’s effecting their day to day lives.
During your conversation, if you keep it very “surface level”; meaning you don’t dive deep into why they’re looking for a solution in the first place, it’ll be difficult presenting your offer without them negotiating on price.
However, if you dive under the surface and uncover why they’re meeting with you, what issues they’re currently dealing with and how it’s affecting them daily – you’ll have a more honest and transparent conversation.
People buy for two emotional reasons.
They buy because they want to move toward a more desired state, and secondly to move away from pain, concerns and discomfort.
Generally speaking, there are three types of pain points you should get clarity in if you wish to prevent negotiating on price.
- Technical issues they’re facing
- What impact it’s having on their business
- How it’s affecting them personally, and what it means for their current situation and future
To learn how to ask questions that find pain, read the related linked article below.
Related article: Pain Points & Sales – Your Ultimate Guide
How To Negotiate Price Tip #2 – Discuss Money
In our online sales training program called The 5% Sales Blueprint, we have a module called Money Talk.
When learning how to negotiate price effectively, it’s critical that you learn what budget they have, and what it will mean money wise if they don’t take any kind of action to solve their pain points.
Money talk is a discussion about money – and is an important part of your sales conversation because without discussing money, there won’t be any sale!
Many Sales Professionals and Business Owners stumble upon the situation of negotiating on price, because they leave discussing money until the very end of their sales conversations.
The problem with this is two-fold:
- They may be unqualified to afford your offer; learning this at the end wastes your time, money and resources
- You’ll end up at the end of your conversation speaking about money – rather than what it’ll mean after they own your product or service
People buy things because they’re looking for a specific outcome – and more importantly, what it’ll mean when they own that outcome.
If your sales conversation ends discussing money rather than the intention of why they’re talking to you in the first place, you’re placing your potential sale at risk.
For this reason, we encourage Sales Professionals and Business Owners to discuss money during the sales process, rather than at the end.
In our Money Talk module, we cover two aspects, in which we’ll outline below. These make up the other two important strategies to cover in your sales conversations.
Tip #3 – What Does It Mean If They Do Nothing?
As mentioned, during your sales conversations you’ll be asking questions to identify the pain points in relation to their current situation.
During your Money Talk phase, you need to ask and more importantly have them spell out – what happens if they do nothing?
What is the cost of inaction on their end?
If they have effectively told you about their problems, and what that means for their current situation; doing nothing and taking no action is going to mean more of the same.
By having them openly answer that doing nothing will mean more of the same, they’ll be more willing to invest in a solution for the intended outcome that they need.
For this to work – when you’re finding pain, you’ll need to receive answers both logically and emotionally.
If the responses are purely logically, then you’ll still struggle with the sale.
The reason being, is people buy emotionally and then justify it logically.
Both are paramount.
By carefully getting them to unpack what it will mean by taking no action, you’ll most likely avoid having to get to a place where you’re negotiating on price.
What Will They Invest To Solve The Problem?
The second part of Money Talk, and third part of learning how to negotiate price, is finding out what they will pay to make the pain go away.
What will they invest to solve the issue?
An important point here we need to mention, is that you’re not asking what they will pay for your product or service.
By discussing your solution here, you’ll be going into something we call ‘premature presentation’ mode, because it’s still too soon to discuss a solution.
Keep the conversation all about them.
Learn what they have put aside or are willing to get access to invest wise to solve their pain points.
If the price of the issue is a lot bigger than:
- What your product or service costs
- And they have let you know they have money aside greater than what your product or service costs
You’ll most likely not get into a situation where you’re negotiating on price.
In order to avoid negotiating on price and make the three strategies work, you need to be a master at asking great questions, and have the responses come from them.
Good questions help potential clients sell themselves, rather than you having to do all the selling.
Related article: Sales Probing Questions – 20 x To Ask Daily
How To Negotiate Price Effectively – Final Thoughts
Learning how to negotiate price effectively is a critical lesson to learn to enhance your sales, and although it’s a normal and common part of the sale process, try to avoid getting there by using these three outlined strategies.
If they do bring up price at the end even when you’ve asked these three questions, chances are they’re just taking a chance at seeing if they can potentially save more money.
When and if your potential clients do – stand your ground and hold your value.
If you’re interested in learning how to increase your negotiation and sales skills, register for our free 7 Day Sales Challenge here.
Want To Close Easier?
If you’re tired of inconsistent sales and want to learn a proven system to close easier, then check out our online sales training course, The 5% Sales Blueprint.
It’ll give you everything you need to close sales consistently, is self-paced, and highly affordable.
To learn more, click on the link directly below.