I've had half a dozen negotiation conversations in the last two weeks.

I've had half a dozen negotiation conversations in the last two weeks.

Deals ranging from $25k-300k.

And I'm reminded about why buyers negotiate.

Before you discount in any form, confirm the following:

1) That you're vendor of choice (don't allow yourself to be price shopped)
2) Find out the reason for the discount (maybe you can de-risk in other ways)
3) Understand what happens next (don't set yourself up to keep lowering price)

In the deals I'm working, here are why buyers are negotiating:

💪 To make the effort worth it:

Your champion has a full-time job, which isn't buying solutions like yours. It's a lot of work for a senior leader to get others on board, manage procurement, and secure budget.

They want great terms with the lowest likelihood of getting rejected by the rest of the buying committee.

This sounds like: "I need [specific ask] because I have a lot going on and want to get this approved as quickly as possible."

 

🤩 To look good:

Your champion looks like a rockstar if they bring a big win back to their leadership and procurement team.

They build a reputation with execs that they're looking out for the company. And will get the best deal possible.

This sounds like: "Procurement will be much easier to deal with if I can show them we already have some gives from you."


⚠️ Risk reduction:

>50% of B2B buyers regret software purchases (Gartner). If an exec is going to bat and risking their reputation for you, they want to reduce risk in any way possible to protect their downside.

This sounds like: "We need a way out if we're not finding value."


💰 Budgeted Amounts or Purchasing Thresholds:

The buyer has legitimate budget constraints or purchasing thresholds. They have more control over purchases when the amount is within that budget. When the amount exceeds their budget, processes and internal approvals are different.

This is rarely the case and a bluff many buyers will use.

This sounds like: “We have 125k budgeted for this project.”


🤼‍♀️ Sport:

The buyer isn’t dealing with any constraints. They know that you and everyone else would love their business. They negotiate for sport.

Oftentimes this sounds like the previous two categories, but can't be backed up by specific constraints:

Prospect: "I can get this done for $50k but not more"
Rep: “Okay, do you mind sharing why?”
Prospect: “Well…[proceeds to give B.S. answer]”.


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You'll oftentimes need to give in these situations. But make sure you've though through beforehand what you'll ask for in return.

I put together a list of “gives and gets” in the image that can mean something to the buyer (that don’t all require you to lower the total contract value).