The Price is Right—or Not: Should You Negotiate?

Every once in awhile I have a serendipitous moment, when I’m thinking something and—BAM! (as Emeril would say)—I read a piece on the same or similar topic.

Such was the case the other day.  I saw a blog by a friend and former colleague Andy Eklund on negotiating (http://goo.gl/VvqMA).  He focuses on the creative process, we focus on sales, and I enjoy the similarities in how we think.  There are also some differences because of the nature of our two distinct businesses.

Awhile ago, our company, Opus Partners, Inc., announced its offering of a public seminar on Social Sales Effectiveness.  We set a price for the 3-hour session, offering an early bird discount.  One of the first respondents asked if we’d reduce our cost, offering no explanation as to her rationale.  (In fact, this same person had previously been a recipient of our expertise at a free seminar that we’d done for marketing purposes and said she found it quite useful.)

Though we’d facilitated countless sessions on the same topic for established clients, we were new to the paid public seminar experience.  So I wondered: were we being unreasonable?  Before publicizing, we’d asked folks who’d originally prompted us to do this if the price was right.  The response was universal—it was a bargain!  Then I searched on the internet and found a similar seminar that was almost twice the price!  I decided our offering was more than fair.  If this person saw the value, fine.  If not, so be it.  And I now can happily report that our seminar was well attended.

It’s hard to know when and how to negotiate, especially when the economy is far from robust.  I agree with the advice Andy learned early in his career that negotiating is good business and it should not be taken personally.  I have to say though that I never get into price “wars,” and find myself negotiating very infrequently

I attribute this to several factors:

  1. First and foremost, we qualify prospects.  Someone once said that we ask superior quality questions that get to the heart of the challenges facing a business.  That means asking some tough questions up front to determine early on if we should even take this prospect beyond the first conversation.
  2. We look for red flags.  What potential obstacles are there to working with this client?  Are there market factors, internal issues, personality concerns, etc.?
  3. We commit time for discovery.  We prepare to dedicate 1-2 hours to research our prospect, develop appropriate questions and have an initial 30- to 60-minute discussion before submitting an SOW (statement of work) outlining our proposed solutions.  You need to be sure that you have the information you need to begin the solution process.
  4. We articulate our value.  We are sure to explain how we can help and secure client buy-in.  We educate our prospect about certain realties and simultaneously clarify how we might be part of the solution.
  5. We are prepared to accept the fact that sometimes people either a) negotiate for its own sake and/or b) will not see the value.  Usually in the latter case, our fundamental values are not in agreement or even at odds.  And we part friends.
  6. We recognize that it’s all about relationships.  We develop relationships that are, to quote Andy, “honest, candid and constructive.”  In a competitive situation, the relationship with your prospect can be the difference between turning them into a client or not.  We happily report that our “win” rate—our ability to turn incoming prospects into clients—is over 60%.  We don’t respond to blanket RFPs.
  7. We always ask about the anticipated budget.  In our experience, we do this after the initial 2 hours of discovery and discussion.  We chalk it up to the cost of sale.  We also break out components of the SOW.  Only then, after we have a clearer understanding of client needs, agreed upon roles in the project, and objectives to be obtained, do we discuss the final investment.  At that point, if there are concerns, we are clear what, if anything, can be cut and its likely impact on the overall success and desired results of the project.

In summary, we are judicious about any negotiating.  There have been times when the number we quote is mostly inflexible.  That’s because we know what works—how long it takes and what, as consultants, we need to invest.  We’ve been doing it in excess of a combined 55+ years.  It’s not perfection, but we know better than to mess with it.

And to the woman who may or may not come to our seminar, that’s fine.  If you walk into a relationship only concerned about price, it’s a very rocky start and unlikely to be fruitful.  We’re in it for the long haul.  And, as Andy said, we aren’t going to “go soft on [our] principles.”

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2 Responses to “The Price is Right—or Not: Should You Negotiate?”

  1. shobavish Says:

    Virginia, very interesting post. I often find myself stumped by this problem of how to react to negotiation/bargaining – should I be flexible and figure out a way to ‘bag the client’ or should I be insulted that they think I picked a number out of thin air? I like your emphasis on value and relationships. I am also in complete agreement that these have to be the basis of any meaningful long-term partnership.

  2. all three Says:

    Thank you for a great post.

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