Price negotiation is part of life. We need to accept this. Once we do, we can chalk a clear path about how to deal with it. Let us understand what kind of negotiators one can come across when providing content development or content marketing services:
- Customers who never negotiate. Such customers recognize your firm’s value instantly and pay.
- Customers who negotiate to get a lower price. Some of them are cautious buyers who don’t want to pay extra for a service if they can get it at a lower price. If nothing else, negotiation will help them understand how good your firm is.
- Customers who want a deal (All negotiations are not equal. There is a difference between negotiating for price reduction and negotiating for a deal. By deal, I mean a part of the cost for rendering the service is on you and your firm makes incremental losses with each passing billing cycle.)
Now, how can an agency deal with the various kinds of negotiations?
- When negotiation is meaningless or does not acknowledge your firm’s expertise, you can choose to walk away.
- When the negotiation is for some reduction in price, offer the customer such service that lets you still make a profit. I suggest not to offer more service at your price point. That way, you MAY incur a loss rather than a profit based on what that “more” consists of. So, this is highly subjective.
When the negotiation is for a reduction in price, the first question you should ask is why is customer negotiating?
- To save money.
- Has budget constraints.
- Can’t see the value in your offering.
Cases 1 and 2 can be addressed by offering a limited service. In both cases, you probably have an active opportunity to upsell.
Case 3 needs more thought. If the customer adds weight to your firm’s profile, you may choose to give him a deal for a limited period. If this is not the case, chalk your own responses.
Also, establish base prices below which you cannot work. Make them based on resource and infrastructure cost, profitability, value addition, etc. That way, you know you are still earning a profit, negotiation or no negotiation.
A sale is about the customer while pricing is about your product/service quality/value addition. Bridge them to the best of your ability. You will soon be good at sales negotiations.