Can you beat this price?

Posted by Wildfire Marketing Group

From time to time, almost every business owner is forced to negotiate prices in order to close a deal; especially during a recession. If you’ve been through this before, you know that it can go down hill pretty quickly and end with both sides unhappy. The key to creating a win-win scenario is knowing how much wiggle room you have with your prices, and staying within that range.

Sometimes you may have to cut your prices just to keep revenue flowing, but you still need to make a reasonable profit. The problem is that if you spend much time working with an unprofitable client, it takes away from the time you could be spending with profitable clients, and you’ll most likely begin to become resentful and under-appreciated. Before long, you’ll find yourself looking for ways to cut corners on their project so that you can get it done and move on to more profitable ones.

Keep in mind that you are responsible for the perception of value with your clients – if you arbitrarily drop your prices without adjusting what they receive in return, you will diminish their perceived value of our products or services and they will come to expect discounts all the time. Your company will become a commodity and client loyalty will go to the lowest bidder. When you find yourself in a position where you have to provide a discount in order to make a deal work, you also have to adjust the products or services you are providing. Remember, your goal is to create a win-win scenario and if you’re handing out discounts just because clients asked for them, you’re not winning anything.

Some options, instead of offering discounts, are to:

• Add more value, such as adding additional products or services for the same price. This will give your clients more bang for their buck while helping you to keep your profit margin higher than if you simply gave them a discount.
• Offer in-house financing. If your client just doesn’t have the appropriate funds at the moment, but they are comfortable with the price, you may be able to finance a portion or all of the price. You will want to be very selective with this though, perhaps limiting it to existing clients with a solid track record.
• Create a referral program where clients earn credit toward purchases from your company by sending you qualified prospects who become clients. In their eyes, it’s free money for them, and for you, it can be a steady stream of business from a trusted source.

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