“I need your best and final price.”
This question marks the beginning of the pricing squeeze and is often asked after multiple vendors have issued quotes or proposals. Very often it’s asked by a non-Key Player that senior management designates to make this request. Sellers can waste valuable time and leave money on the table if they make the wrong responses.
Two (2) examples of BAD and COSTLY responses:
- “Where do I need to be?” This is the worst possible response a salesperson can give. It amounts to acknowledging a discount is in order. Beyond that sellers give the impression they have unlimited authority to discount. This response allows buyers to wrest control of negotiations because smart buyers will specify the price they want to pay, not the price they’re willing to pay. Final pricing is strongly influenced by how low the bar is set. I refer to “Where do I need to be?” as the 6 most expensive words salespeople can utter.
- Offer a lower price. This can backfire and the buyer’s end game is usually to leverage lower pricing to pressure the vendor of choice to discount. There may also be instances where the price given becomes the starting point for negotiations if and when decision makers get involved. Once a seller makes a concession it becomes a slippery slope as buyers press for even better deals.
? Try This Approach Instead
My suggestion is to respond to requests for best and final pricing as follows:
“Are we the vendor of choice and is price the last obstacle to doing business?”
- If the answer is yes, request a meeting with the decision maker and if necessary bring your manager.
- If the answer is “No, not yet” or “Maybe” then sellers should respond as follows:
It appears your organization has further vendor evaluation to do so at this stage. I hope we’ll ultimately become your vendor of choice. If so, at that time I can bring my manager to meet with (the decision maker) and you to see if we can reach agreement.
Some salespeople have trouble walking away without offering concessions.
When you think about it, most buyers have “Column A” vendors that are often granted last looks. If you are Column A, buyers will come back to you if you don’t discount. If you’re Column B, C or D it is highly unlikely you’ll get the business and you leave a discounted price on the street that may come back to haunt you in future opportunities.
In today’s business environment everyone is flat out busy. As a seller you can save time and angst if you delay negotiating until you have determined that you are the vendor of choice. Unless you sell true commodities it’s virtually impossible to discount your way into becoming Column A.
By John Holland, Chief Content Officer, CustomerCentric Selling®