Negotiating On Factors Other Than Price – Adding Value
Rule No 1
Perhaps the first rule in business is the following. Regardless of what you’re trying to sell, the entire focus should be on catering to client need and enhancing the value of your product or service. That should always be the bottom line. Lowering the price on just a whim when negotiating is the worst thing that you can do. It lowers the standards that you’ve set for yourself and ultimately it pinches where it hurts most — your business.
Value your Work
So why isn’t price negotiable? Well, for one — since you know the true value of your product and have priced it accordingly, any effort to lower it will cheapen it in the eyes of others. Once you lower the price, you may be lowering the bar forever. That’s not the way to keep customers or get new ones.
At times, crazy as it sounds, its worthwhile doing a job for free rather than negotiating price and reducing your rate. This helps you stick to your principles about pricing. At the same time, it encourages the view that you don’t mind working for free when the situation demands it. For instance, in a disaster-hit area, offering your services for free is for a humanitarian cause and you don’t lose face over pricing. Remember, the moment you reduce your rate, the bottom line changes. That’s something you don’t want to do.
The Value of your Product or Service
Value is important—if customers feel that they’ve gained value that’s equal to or greater than the price of a product, they are satisfied. So that’s what the focus should be on.
In order to keep current customers happy and satisfied, enhance the value of your product or services. Offer extras that are worth the while. You can offer free products for a limited period along with the regular products. It doesn’t matter if this ends up costing you a little more than usual. In the long run it’s worth it for the price of the product remains untouched.
This clearly reinforces the value of the product or service and drives home the fact that while negotiating can be for products. Price is one aspect that is non-negotiable. It isn’t as if you can palm off products for any price just to increase sales. That’s the worst thing that can happen to a business. People buy products and services for the value they get. Price is the cost they incur for the benefits they get.
If your company can deliver faster and more accurate services and consistently deliver quality work, the price will never be a negotiating point from a customer’s perspective.
Remember, conversations between clients should be about products and services and should never start off with the price. They should underscore value for as Drucker says “The customer never buys a product, he buys value.”