Why Your Reps Discount Instead of Negotiate

May 3, 2019

Shawn Parrotte

I was on vacation in Nicaragua when it hit me: the vendor who was trying to sell us bracelets didn’t want to lower his price. When we asked if he’d negotiate, without pause he offered additional product at a lower unit price. First this included three bracelets for $10 and then five bracelets for $10.

But why do we see the opposite occur so often in software sales with reps frequently and even proactively offering up discounts? There are five common reasons.

Reps Focus on Price Instead of Value #

If the vendor in Nicaragua had agreed to lower the price for a single bracelet he would have inadvertently admitted that the value of the bracelet was lower than what he’d originally stated. Instead, he took a different approach and offered to provide more value by providing more product -- but only if we were willing to invest more too.

Successful sellers focus on value rather than price. To do this they refocus conversations about pricing on to the product they’re selling and the benefits the solution provides.

When we asked the vendor for a lower price, he highlighted the quality materials the bracelet was made of and its intricate design.

To take a similar approach, next time a prospect drives the conversation toward lower pricing, try saying: “Before we talk about lowering price, I want to ensure you really understand the value that is included and why we’ve priced our solution the way we have.”

Reps Don’t Ask the Right Questions #

Sometimes reps get thrown off when a prospect says the solution is too expensive or asks for a discount. Rather than pausing and taking the time to investigate what’s motivating the objection, the rep says something to the effect of, “I’ll have to talk to my boss.”

Instead, try saying, “Before we discuss pricing, let’s align on what you’re looking for in a solution.”

If a prospect is bullish on securing a lower price, try saying “Do you see price being a major obstacle in the process? - and if so, why is that?”

Or, “What more might you need to pay the price I shared with you?”

If all else fails and discounting seems like the logical next step, put work on the customer by asking them “What might be a reasonable discount for you?”

Reps Fail to Align Their Stakeholders #

Often the person you are selling to must sell in your solution to their boss or procurement team.

If you don’t build a strong business case with your stakeholder and give them the materials they need to justify price for you, they won’t be able to convey the value internally.

Top performers arm their champion with a business case and detailed rate card and even go a step further by helping their champion role-play against any objections.

They also work hard to ensure they have direct contact with anyone involved in the decision-making process so they can walk them through the offering, business case, and why the value that’s included justifies the price.

Reps Use Price as Their First or Only Concession #

Rather than conceding on price, offer up a few alternatives. This could include additional product or services.

If you do feel conceding on price is necessary to win the deal, be sure to ask for something you can get in return. Ideas can include a client testimonial or case study, internal and external referrals, a quicker signature, a start date that’s better aligned with your business’ needs, or participation on a customer counsel.

Reps Aren’t Armed with the Right Pricing Model or Resources #

Finally, when reps frequently revert to discounting it can sometimes be an indicator that you don’t have the right pricing model or resources in place.

Perhaps you are really over-charging or you haven’t provided a model that enables reps to scale price per unit down as prospect’s invest more. Perhaps you haven’t invested enough time in training or built out the right resources, such as a rate card that is detailed enough and doesn’t under-sell aspects of your offering, such as the services that you provide.

Be sure to arm your reps with the things they need to succeed in negotiations, which can include ROI stories and testimonials, a business case template, objection handling cheat sheets, a detailed rate card, a pricing calculator, and an ROI calculator. Role-play on pricing objection handles often and dedicate time toward film reviews, as well as listening to recorded calls. Also be sure to keep a close pulse on market feedback and how your rates compare to adjacent or competitive offerings.

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