Q & A Table of Contents
Deals Keep Breaking Down Over Price
From: Zeeshan, Dammam, Saudi Arabia
Question: I am finding some problem during negotiation. We provide dedicated services to our customers. When we submit the proposal and it is acceptable at the last minute things go wrong because we cannot compromise on rates. Could you kindly advise me how can I manage this thing?
Response: It sounds as if you should do several sorts of homework before undertaking negotiations. Your first research should focus on your companyıs price/rate structure. When you lose business because folks say your rates are too high, you should find out whether they are simply trying to push your rates down to increase their benefits or whether your rates are indeed inconsistent with the market or are higher than those of your competitors. It is also possible that your companyıs cost structure the amount of money your company has to spend to deliver services is higher than it should be.
Focusing on that last issue first, it may mean that there should be internal negotiation within your company. Different elements of your company may have priorities that bring about problems in setting your rates. Perhaps your companyıs employees are particularly expensive, it may be that you are paying too much for supplies or raw materials, or your companyıs ownership is trying to make too much profit for the local market. In these situations, negotiations within your company may help improve the situation for your negotiations with potential clients.
You also need to look at the price/value issue. For example if competitors can offer lower prices but their equipment breaks down often, they donıt complete jobs on schedule, or there are other quality problems with them perhaps you can convince potential clients that you offer better value and that costs extra money.
When you deal with potential customers it is crucial to find out what theyıre looking for and why. Then figure out how to convince them that what you have to offer is what they want. Sell the value first; if customers like that, price should be less of an issue.
If price is central to the process you may want to address that issue first. For one price you can deliver outstanding service. For a lower price, perhaps a couple of special features of what you can offer wonıt be available.
Another approach is to address price by being prepared to concede. Know that your initial price is going to be rejected and be ready to offer a price that makes clients feel as if they have gained but is still within a good range for your company.
Think about the alternatives. Ask questions. Listen with both ears. These will all help with your negotiations.
Good luck,
Steve
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