If you’re a sales professional, you’re probably very skilled at many aspects of price negotiations. But there’s one big mistake I see even experienced sales professionals making on a regular basis, and it’s this: Negotiating one item at a time.
The problem with this is that, when you lose sight of the big picture, you may be bargaining away more than you realize.
For example, at the beginning of a negotiation, an agreement to provide 80/20 payment terms instead of your standard 90/10 terms may seem like a small concession to make.
However, that concession won’t seem insignificant at the end of a negotiation when it’s combined with other concessions such as lower prices, giveaways, additional field support, and tighter specifications. The seemingly little things can add up quickly, until before you know it, you’ve significantly cut into your bottom line.
When the customer says, “I need better payment terms,” your response should be, “That’s certainly possible if you’re willing to agree to the price we’ve quoted,” or, “We’ll need to know and consider all of the concessions you’re looking for before we commit to any specifics.”
You can give as many estimates as you want, but don’t make firm commitments on pricing, delivery, specifications, terms, field support, spare parts, or software until you know what’s really most important to the customer. You may be able to graciously concede something that feels tremendously significant to the other side while not actually giving up all that much once you have an accurate read on the situation as a whole.
Never negotiate one item at a time; always think in terms of final context and package.