Negotiation is nothing new in the AV industry.
While these conversations are seldom simple, sometimes they present an especially complex issue that’s harder to unpack.
In negotiation challenges where the customer is asking about specific line-item pricing and wanting more transparency in the proposal, there’s typically an underlying issue that needs to be addressed:
Are they really concerned with price… or are they looking for a deal?
“Price” and “Deal” are very different when it comes to negotiation. In order to reach an agreement that satisfies both you and your client, you have to know which issue you need to address.
Price vs. Deal
What’s the difference in price and deal? Price is about the bottom line. How much are they willing to pay for your services? If they can’t afford the proposal, you’re facing an issue of price.
Deals are about the overall value. They can afford the total price, but they want to feel like they’re getting plenty of bang for their buck. This is a matter of deal.
How to Find The Real Conversation
A discussion that begins with a pricing question may actually be about the deal the customers want. But the only way they see to discuss the deal is to nit-pick pricing specifics. To get to the real issue, ask probing questions like these.
Help me understand why this particular price is important in our transaction?
If people are picking through our proposals, looking for line-items to discuss, we may have approached them inappropriately with our proposal. While it seems they’re looking for specific prices to contest, maybe all they really want to say is, “I only have 80% of this amount of money to spend on this service. Is there something we can do?”
The overall price of the package is X. Are you okay with that amount?
If they’re not, it’s a basic pricing issue. If they’re okay with paying that total, it’s not the actual price that’s the problem. Your customer is concerned with the overall value of the deal. They just didn’t know how to bring it up without talking about the actual price.
These questions help us reach the honest conversations we need to have with our customers about the proposal. And if they don’t bring up their real issues, we need to start the conversation and navigate it to an honest place.
You Don’t Know the Real Issue If You Don’t Ask
I’ve experienced these price vs. deal conversations repeatedly, but one particular interaction stands out. I had a client many years ago who was very focused on price. In particular, she was focused on the courtesy discount we’d included in the proposal. The courtesy discount was 25%, but she wanted a 40% discount.
Finally I asked her, “Help me understand. What’s the price you’re trying hit with a 40% discount?”
She replied, “No, no. I just want the 40%.”
So, I thought about it for a second… and said, “So you mean, if I raise my prices and give you the 40% discount, but end up with the same bottom line price, you’re okay with that?”
She said, “Yes, that would be fine.”
I didn’t see that coming!
You never know what’s on people’s minds if you don’t ask. Don’t get caught up in the price conversation — assume there’s something else behind it. Ask some probing questions that help you pivot to conversations about the deal.
Try to find out:
- What is the deal worth?
- How much money do they have to spend?
- What do they want to get for that amount?
Most often, when you have discussions about the real issue, you and your customer will be able to find common ground.