Good vs Evil

Skywalker v?Vader

Peter Pan v?Capt. Hook

Bond v Goldfinger

A common tactic for buyers is to try and commoditise your product and service offering. Positioning you as the same as your competitor so they can use this lack of difference to drive lower prices. Undermining your differentiation. Attacking your?value in an attempt to force you to lower your price.

We all know the expression that if you’re the same as your competitor then the only differentiator is price. And competing on price only ever leads to lower margins.

When a customer tries to commoditise your product or service, they typically focus on price as the primary differentiator, pushing the conversation towards a price war.

To counter this and maintain your value, here are some effective price negotiation tactics:

1.?Emphasise Value Over Price

• Highlight Differentiated Features and Benefits:?Highlight the aspects of your product or service that differentiate it from competitors. This could be superior quality, better features, customisation options, or exceptional service, quantifiable benefits and value outcomes.
• Focus on ROI:?Demonstrate the long-term value and return on investment (ROI) your product offers, such as cost savings, increased efficiency, or other benefits that justify a higher price.
• Provide Case Studies:?Share case studies or testimonials that illustrate how your product/service has delivered significant value to other customers.

2.?Bundle or Package Offerings

• Create Bundles:?Offer a package deal that includes additional services, products, or extended warranties, making it harder for the customer to compare directly with competitors.
• Pricing Options:?Present multiple options of service or product bundles, where the different options offer greater value. This gives customers the flexibility to choose according to their needs and budgets, while still steering them toward a higher-value option.

3.?Leverage Relationship and Trust

• Build a Strong Relationship:?Focus on the relationship you’ve built with the customer, emphasising your understanding of their needs and your history of delivering quality.
• Be a Trusted Advisor:?Position yourself as a trusted advisor rather than just a supplier. Offer insights and advice that go beyond the transaction, making it clear that you’re invested in their success.

4.?Highlight Total Cost of Ownership (TCO) or Lifetime Value.

• Compare TCO:?Break down the total cost of ownership over the product's or service's lifecycle, showing how your offering is more cost-effective in the long run due to durability, reliability, or lower maintenance costs.
• Focus on Lifetime Value:?How much value to bring to the customer though out your relationship with year after year.
• Risk Mitigation:?Emphasise how your product/service reduces risks, such as downtime, poor performance, or compliance issues, which can be more costly than the price difference.

5.?Offer Limited Time Incentives

• Time-Sensitive Pricing:?Offer a price or special offer that is time-limited, encouraging the customer to make a decision quickly to avoid losing the opportunity.
• Added Value:?Instead of reducing the price, offer additional services or products for free or at a reduced cost for a limited time, framing it as a special deal.

6.?Negotiate on Terms, Not Price

• Flexible Payment Terms:?Offer more flexible payment terms, such as extended payment periods, one off price adjustments for upfront payments, or financing options, instead of lowering the price.
• Volume Discounts:?Offer discounts based on volume or long-term contracts, ensuring that the customer commits to a larger purchase or longer relationship.
• Other terms:?Such as delivery, logistics, packaging and others can all be negotiated to relieve price pressure.

7.?Understand Their Needs and Pain Points

• Deep Discovery:?Engage in deeper discovery to understand the customer’s specific needs, challenges, and pain points. Tailor your offer to address these, making it harder for them to compare your solution with others.
• Customised Solutions:?Offer customised solutions that are tailored specifically to their needs, which are difficult for competitors to replicate or compare on a price basis alone.

9.?Walk Away Strategically

• Set Boundaries:?Be prepared to walk away if the customer is unwilling to acknowledge the value of your offering. Sometimes, the willingness to walk away can prompt the customer to reconsider.
• Offer a Final Proposal:?Present a final offer that balances value and price, making it clear that this is the best you can do. This can create a sense of urgency and finality, pushing the customer to make a decision.

10.?Educate on Risks of Low-Cost Alternatives

• Highlight Risks:?Educate the customer on the potential risks associated with choosing a cheaper, lower-quality alternative, such as poor performance, hidden costs, or lack of support.
• Stress Quality Assurance:?Emphasise the quality assurance, warranties, and support services you provide, which might not be available with cheaper alternatives.

11.?Know your market and prices

• Market Price Knowledge:?If your customer is pressuring you on price, then make sure you have a good knowledge of what competitor pricing is. Customers will always tell you “they can get a lower price” but is that the reality?

Using these tactics, can help you shift the focus from price alone to the broader value and benefits your product or service provides, helping to avoid commoditisation and maintain your pricing power.

It may not relieve the commoditisation price pressure in every situation, however remember that we don’t need to make it easy for our customers...

and the old maxim always applies…

Don’t give anything away without getting something in return.

PS - that's where your Negotiation Variables Mapper comes in