As a small or medium-sized business (SMB), hearing that your price is "too high" can be frustrating, but dropping your price isn’t always the best solution. In many cases, you can adjust other aspects of your offer to meet your client’s budget while maintaining profitability. By focusing on value, flexibility, and creativity, you can meet your customer’s needs without reducing your price.
In this blog, we’ll explore key strategies SMBs can use to negotiate on other elements of their offer when faced with price objections, including adjusting specifications, altering delivery terms, and modifying pricing models.
1. Adjust Specifications or Materials
One of the simplest ways to reduce costs without cutting your price is by adjusting the client’s specifications. Many projects have built-in flexibility that can be explored to find cost savings without sacrificing the end result.
Example: Use Alternative Materials
If a client is concerned about price, offer them the option to use alternative materials that still meet their quality standards but come at a lower cost. For example, instead of using premium materials, you might suggest mid-tier alternatives that deliver similar performance but at a lower price point.
Example: Opt for Non-OEM Parts
If your business involves products with replaceable parts (e.g., machinery, technology, or vehicles), you could offer non-OEM (Original Equipment Manufacturer) parts, which are often cheaper and still function just as well.
Negotiation Tip:
Ensure that the client understands the trade-offs, such as slightly lower durability or cosmetic differences, but emphasize that the product will still meet their operational requirements.
2. Increase Lead Times or Delivery Flexibility
Faster turnaround times usually come with a premium. Offering to extend lead times can allow your business to take advantage of lower-cost production cycles or shipping methods, ultimately reducing your costs while keeping the client’s price steady.
Example: Lengthen Delivery Times
If your client needs a quick turnaround but is concerned about price, offer a discount in exchange for a longer delivery window. This gives you more flexibility in managing your resources and reduces the cost of expedited labor or shipping.
Example: Optimize Delivery Schedule
If your service or product requires regular deliveries, propose shifting to a less frequent schedule or bundling deliveries to reduce transportation costs.
Negotiation Tip:
Be clear about how this adjustment impacts the delivery process but reassure the client that they will still receive the same level of quality and service.
3. Reduce Consumption or Quantities
In some cases, the client may be willing to adjust their order quantities or consumption to stay within budget. This is especially relevant for consumables or services that can be tailored to usage levels.
Example: Suggest a Lower Usage Model
If your service is based on usage (e.g., cloud storage, energy, or SaaS), suggest a plan where they use fewer resources for a lower price. This could mean scaling back features or reducing the scope of work.
Example: Break Projects into Phases
For larger projects, offer to break down the work into phases. This allows the client to spread their budget over a longer period while still achieving their goals in manageable steps.
Negotiation Tip:
Help the client see how adjusting the scope can still allow them to achieve their objectives over time, rather than all at once.
4. Offer Flexible Payment Terms or Pricing Models
Sometimes, the issue is not the price itself but the timing of payments. Offering more flexible payment terms can make your product or service more affordable without changing the overall cost.
Example: Introduce Payment Plans
Instead of asking for a lump sum upfront, offer the client the option to pay in installments. This spreads out their financial commitment over time, making your service or product more affordable on a month-to-month basis.
Example: Try a Subscription or Lease Model
If applicable, transition from a one-time purchase to a subscription or leasing model. This allows the client to access your product or service at a lower upfront cost, spreading payments out over time.
Negotiation Tip:
Make sure you clearly explain how flexible payment terms won’t affect the final cost of the project, but can ease the financial burden on the client’s cash flow.
5. Bundle Services or Products
Instead of lowering the price on a single item or service, offer a bundled package that adds value at the same cost. This way, your client feels like they’re getting more for their money without you sacrificing profitability.
Example: Offer Complementary Products or Services
If the client is purchasing one service from you, offer a related service at a discounted rate. For example, if you’re selling software, bundle it with additional training or extended customer support.
Example: Provide Added Value
Instead of offering a discount, add value by providing free extras like consulting hours, training, or after-sales support. This makes your offer more attractive without affecting the base price.
Negotiation Tip:
Position the bundle as a value-driven solution that addresses more of the client’s needs, rather than as a discount or price reduction.
6. Emphasize Long-Term Value Over Short-Term Costs
One of the most powerful negotiation tactics is to shift the focus from upfront price to long-term value. Many clients are willing to pay more if they understand the long-term savings or benefits.
Example: Highlight ROI
Show the client how your product or service will save them money or deliver results over time. For example, a higher-priced but more energy-efficient piece of equipment will reduce operating costs in the long run.
Example: Offer a Total Cost of Ownership Analysis
If applicable, demonstrate how the total cost of ownership (TCO) over time makes your solution more cost-effective than cheaper alternatives.
Negotiation Tip:
Provide clear data or case studies to back up your claims. Clients are more likely to accept a higher upfront price if they can see the tangible benefits over time.
Keep the Price, Negotiate the Value
When a client tells you your price is too high, it doesn’t mean you have to slash your prices to win the deal. By negotiating other elements of the offer—whether it’s through adjusting specifications, offering flexible payment terms, or emphasizing long-term value—you can meet their budgetary needs without compromising on price.
Remember, the key to successful negotiation is to understand the client’s underlying needs and offer creative solutions that solve their problems. By doing so, you not only preserve your profitability but also build a stronger, trust-based relationship with your client.
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