Aside from the pure straight bid/reverse auction scenario, where you have been pre-qualified and end up bidding blindly against someone else for little or no ending margin, there is more than often always an opportunity to build your value proposition. It’s not always about price in the Business to Business marketplace.
Where I see lots of salespeople go wrong is that they give away discount far too easily. I’ve blogged previously about the danger trap of falling into multiple of five or ten when discounting, avoid it all costs. As soon as the negotiation starts, they’re off, ten per cent, twenty per cent – any more offers? The trick in negotiation is to understand your value, package it up and if necessary de-package your offer to get the price down if the customer requests it. Alternatively, if you have to discount due to competitive reasons, be prepared to ask for something in return. Things such as a quicker payment, a bulk delivery or a longer commitment period if it is for a professional service.
It’s not easy, you have to have uncovered the need within the customer, be sure of your solution and be prepared to tough it out when needed. It’s always worth remembering that one per cent off the sales price can have an impact on profitability by as much as ten per cent, when taking into account your fixed cost base. So, defend your price, be solid about why you are the best fit and ensure that you are networked well in your target customer to ensure success.