How do you navigate a pricing negotiation with a potential customer who insists on a steep discount?

Acknowledge their request, then emphasize the value and benefits of the product, aligning it with their specific needs. Explain pricing based on quality and ROI, offering alternative solutions like phased purchases or added services instead of a discount. If flexibility is required, propose a smaller, mutually beneficial reduction, keeping profitability intact while building trust and value perception.

"If price is your biggest concern maybe we're not the best fit for each other because our biggest concern is solving all your current problems once & for all and making all your goals a reality, which rarely means the lowest price today, but always means the best choice for long term value for money and peace of mind. So please be sincere with me, are you more interested in the short term cost than the long term value?"

Firstly, let me ask a few questions: 1) Who is asking for a better price?. If it's the economic buyer, I mean, the owner of the funds to be invested in your solution, you have to have previously showed the value of your solution, through a Business Case that shows the metrics you are using, what's the pain and what implicates to the customer not to solve it, and the urgency to go ahead now. If it's the procurement area, you have to underpin your position on the value showed to the economic buyer, taking into account that they have already 'decided' you're the chosen seller. 2) Have you made a deep discovery to uncover the real pain, and have quantified it to show the customer which is the value they're going to receive?.

Identify who the request is coming from and why. Often procurement will be pushing for this above the business, especially in large organisations where the buyer team (a) has targets to hit in savings made and often has bonuses related to this (similar to your sales commission on keeping the price up). and (b) remember they go on training courses on. how to push sales triggers to get the best deal - the same as you go on sales courses Often they will use your end of QTR, competition, risk of not being selected on price etc against you.

Let me ask a few questions: 1) Which is the real reason for asking for a better price?. Is the customer going to get an annual bonus getting a discount (e.g. procurement area); is a constraint associated with the budget?, ... Understand the reasons 2) Is there another option to avoid the discount asked for the customer?: using budgets of two periods instead of only one, multiple invoices also in two periods, longer payment period for the invoices, ... 3) Which is the customer compromise if you give them something?: time of purchase, newt renewal of the contract, references, a business case study, ...

Before they ask for a steep discount, there’s a reason behind. Talk to them, ask questions then listen to the unspoken words. That’s where the main answers are. Then you consider if it’s worth adhering to, rationally to the value you are providing.

Understand the value and how this relates to their real needs. For example if they MUST have function or integration ABC and you are the only ones with this then how will they use a cheaper option. Where possible functionally or contractually test this by offering to lower the price if ABC option is removed as this is something only we have and we thought you required, but if you do not and want to make us like the other vendor we can limit this from the functions in trade for a lower price. This tests if they NEED this option and if so that you have some protection of them buying on price.

Find options that they must have things you offer that you can remove in trade for their request, once you validate they MUST have those functions unique to you you can hold firm and know why, but can offer the option of trade off leaving them to make the choice and not coming across as simply a blocker. This also tests the procurement driver vs the business need.