Negotiating price is one of the most challenging aspects of sales, especially when your prospects have multiple options or limited budgets. How can you convince them that your solution is worth the investment, without compromising your margins or credibility? The key is to demonstrate value, not just quote features or benefits. In this article, we'll show you how to do that in four steps.
Before you can demonstrate value, you need to understand what your prospects value in the first place. That means asking open-ended questions, listening actively, and identifying their pain points, goals, and decision criteria. Don't assume that you know what they want or need, or that they are aware of all the problems or opportunities that your solution can address. By understanding their needs, you can tailor your value proposition to their specific situation and show how your solution can help them achieve their desired outcomes.
100%. Demonstrating value when negotiating price goes back to the first call where, hopefully, you ran a very constructive discovery. You need to remind your prospect what was discussed and how you will bring value based on that and how that supports the price you quoted.
This is the most important step when it comes to B2B sales. Building value while the initial discovery call isn't only important to find what to show product wise, but also you do a 360 when negotiating price back to the challenges they expressed to you at the beginning. Quantifying these pains will only help your position when it comes to pricing.
People don’t like being sold to. They do, however, enjoy having their problems solved. Before you can do that, have a solid understanding of what they need and what they expect. There has to be a 1:1 matchup between expectations and deliverables, or they’ll feel like something is missing, that you didn’t truly listen and understand them, or that you’re pushing your own agenda. Clear communication is essential. A good consultant helps clients separate wants from needs, focusing on and prioritizing results. If you can do this through consultative selling and set the bar to where your deliverables exceeds their expectations, then you’ll be far more successful than your competition.
The cornerstone of negotiation starts way before you end up negotiating. Train your salespeople to uncover the financial cost of not having your product or service. If they've got an existing supplier, use specific questions that uncover problems that ultimately trace back to that supplier (without ever criticising them). I call these 'fee defence' questions. Client: "That's expensive" Salesperson: "if I could take you back a moment ago, you said {XXX} had cost you {$1000s}, sorry to hear that by the way. On the basis that I can remove that cost for you, don't you think the little extra will save you significantly in the short and medium term?"
When negotiating price, demonstrating value is crucial. To do so effectively, follow these steps: 1. Understand their needs by asking questions and listening actively. 2. Quantify the benefits by attaching concrete numbers or metrics to the outcomes your solution can deliver. 3. Provide social proof through case studies and testimonials. 4. Differentiate from the competition by emphasizing unique selling points. By following these steps, you can convince prospects that your solution is worth the investment without compromising margins or credibility.
Once you know what your prospects value, you need to quantify the impact that your solution can have on their situation. How much time, money, or resources can they save or gain by using your solution? How much can they improve their performance, quality, or satisfaction? How much can they reduce their risks, costs, or inefficiencies? Use concrete numbers, examples, or testimonials to back up your claims and show the return on investment (ROI) that your solution can deliver. Avoid vague or generic statements that don't relate to their needs or goals.
Numbers speak volumes when negotiating price. Use data and statistics to back up your claims. For example, if your product improves efficiency, calculate the potential time or cost savings a customer can expect. When presenting quantifiable evidence, be prepared to explain your methodology and sources to build credibility.
Again, goes back to the discovery where, hopefully, you already quantified the impact on the business. Whatever you discovered then is what you must quantify now.
Aftermarket Account Specialist at Xylem | Professional Writer | Molecular Biology B.Sc
When negotiating on price, the value of your solution can be enhanced by elaborating on where your company saves them on factors unrelated to the product itself. This can be front-end with free shipping, or back end with a 100% store credit return policy, shipping covered.
You often get pushback on price when you haven't done a great job at getting buy-in on the business case for your solution from your prospect. The business case should reflect their assumptions and cover the full range of quantitative and qualitative outcomes. It's important to show a range of potential scenarios (conservative, base and optimistic) instead of just one. The other key piece is to justify that your solution is differentiated. That it uniquely solves their problem or that you do it significantly better/more cost effectively than alternative solutions. If you do those two well, then you shouldn't get much push back on price.
Quantifying outcomes and opportunity can only truly be done if you have understood the prospects status quo in detail, during a discovery. If you are new to this or your company do not provide frameworks, three general areas to focus on gaining quantitative insight from are: Time (how much time is taken to do X task) Money (how much is currently being spent on X) People (how many people in the team are doing X activity) helping a prospect save time, you can quantify an outcome. helping a prospect save money, you can quantify an outcome. helping a prospect free up their workforce and deliver the same results with less people, you can quantify the outcome. The more you learn in your discovery, the easier it is to quantify.
Another way to demonstrate value is to differentiate your solution from your competitors. Why should your prospects choose you over other alternatives? What makes your solution unique, superior, or more suitable for their situation? How do you solve their problems or meet their needs better than anyone else? Highlight your competitive advantages, such as your features, quality, service, reputation, or guarantees. Use comparisons, contrasts, or stories to show how your solution stands out from the crowd and delivers more value than others.
I agree on this point , its wasting time if you need to make strategies against competition . Rather focus on the strenghts & create a value based on reading the targeted customer's requirement & offering them value . Ofcourse ypu need to be aware of competition but your strategies should be build around your strengths & not on your weaknesses .
I would avoid competitors unless you are specifically aware they are being considered. If so, you must know the competitor and what they bring to the table and how your value differentiates.
Focussing on the competition is a very dangerous strategy in sales / pricing discussions. Unless a commodity sale, most products and services have prices based upon how much the customer believes the product or service is worth or the consumer’s perceived value of the product or service in question. Any sales person should fully understand why their product or service is priced at the level it is and be able to fully articulate this in a way that demonstrates real value to the buyer. If they don't then the Marketing function isn't performing its job properly.
Why bother wasting time worrying about your competitors. If you're really in the negotiation phase of your sales process you're on the home straight. At this stage this should be more about terms, colour, size, delivery day etc. You'll know this because you've done an excellent job in the Approach and Analyse phase aka Discovery. If you're stuck on price go back to this phase and revisit what problem your solving and the value you're adding. Nothing to do with competitors.
I would consider structuring the competitive conversation using Hygiene (basic) and Motivation factors. Hygiene factors could be: 1/ Prospect needs your solution to be of good quality 2/ Prospect needs your solution to be implemented fast A Prospect would expect ALL Hygiene factors to be fulfilled regardless of speaking to Company A, Company B, Company C. If you are not "significantly faster" or not "significantly better quality" - there is no point in conversing about Hygiene factors since all companies will say they are the fastest and they are the best quality. Shift the conversation towards a Motivation factor such as working with a salesperson who can roll up their sleeves and do implementation [versus a "normal salesperson".]
Finally, you need to address any objections that your prospects may have about your price or value. Objections are not necessarily rejections, but rather signals that your prospects need more information, reassurance, or clarification to make a decision. Don't ignore or dismiss them, but rather use them as opportunities to demonstrate value. For example, if your prospects say that your price is too high, you can show them how your solution can help them save or make more money in the long run, or how your price reflects your quality, service, or warranty. If they say that they need to think about it, you can create a sense of urgency by showing them the cost of inaction, the scarcity of your offer, or the benefits of acting now.
By following these four steps, you can demonstrate value when negotiating price and persuade your prospects that your solution is worth every penny. Remember, value is not what you say it is, but what your prospects perceive it to be. So focus on their needs, goals, and preferences, and show them how your solution can help them achieve them better than anyone else.
Again if you are really in the negotiation phase you're objections should already have been mostly dealt with. If you are handling big objections now, you've not do the discovery phase well enough. In reality, if your buyer is some 80% through their decision when the reach out to you, you're rushing these last stages of your sales process because you can smell the sale. My advise is stay longer in the Approach and Analyse phase (discovery) and get this scope piece nailed. From here we're really only negotiating on how we make things happen. Good luck!
If you are talking about price before you have demonstrated value by asking great questions and understanding your client, you are too late. Great salespeople ask "let's assume our price is competitive, what else would be important to you?"
Consider offering innovative pricing models: pay per use, performance-based pricing, cashback, discount if there is a minimum order of X, split payment of 50:50, instalment of X months, special 1st time collaboration discount. Give prospects flexibility and control over how they spend their budget.
In our sales presentations, we typically begin with our proposal. Before negotiating on pricing, we aim to understand if we're among our prospect's short-list of preferred providers. Once that's clear, we showcase our value by emphasizing outcomes, ROI, and past successes with quantifiable results. In lieu of a price reduction, we then showcase our unique advantages, flexible financing terms, and additional services. Our goal is to prioritize our prospect's goals/needs and emphasize long-term benefits over immediate costs.
Some tips: 1. Understand your value proposition 2. Know your customer/audience 3. Highlight benefits, not just features 4. Provide quantifiable evidence 5. Offer customization 6. Highlight ROI value 7. Address objections patiently and thoughtfully Effectively demonstrating value when negotiating price is an art that requires preparation, empathy, and skill. Adaptability is key here to get a win-win