Almost every business negotiation will include negotiating prices, particularly in larger business-to-business deals. For sellers, the challenge is to convince their clients that their product or service is worth more than its price. But not all buyers are the same, so we rounded up expert tips to help you get your buyers to pay more.
Here are 25 business negotiation tips from the pros.
1. Clearly Demonstrate Your Product’s Value
Jason Morjaria, Founder and CEO, Commusoft
Too many small businesses are afraid to charge premium prices because they think customers won’t pay it. But if a customer balks at your price, it’s often not because your product or service isn’t worth it, but because you haven’t done a good job of showing the value you’re offering. What problem does your product solve? How will your customer feel after using it? Use strong copywriting, testimonials, and other forms of social proof to help the customer envision how great they’ll feel when your product has solved their problem and to truly understand the positive impact your business will have on their life. People are happy to pay more for a solution they feel good about.
2. Put More Effort in Personalized, High-Touch Relationships
Rob Braiman, Founder and CEO, Cogent Analytics
As a small business owner and serial entrepreneur, it’s always a challenge to get people to pay for what you believe your product or service is worth. Aside from what the actual competitive street price is for your product or service, in the end, people don’t buy based on what the product or service is. When given a choice, more often than not, they buy value that’s rooted in transparent and trustworthy relationships. Despite the trend of impersonal emails and online interaction, it is the old-fashioned personalized, high-touch relationships that win in the end and can garner higher prices.
Whether it is a conscious realization or an unconscious rationalization, quality human interaction based on sincerity and integrity is the value-add that sells products and services and wins business.
3. Create a Sense of Urgency
Kris Lippi, Owner and Real Estate Broker, Get LISTED Realty
The absolute best way to get a buyer to pay more for a house is to make them feel like there is a chance they will not get the house by letting them know there are multiple offers on the home. In order to attract multiple offers, you need to create a perfect listing immediately when putting the home on the market. You do this by staging the home to sell and taking great photographs and pricing correctly or even slightly below market value.
This creates a sense of urgency that a buyer will lose out on a deal for their dream home. Once you have multiple offers, you create an auction environment, you are able to get buyers to submit their maximum offers, and you get the highest price for your home.
4. Never Apologize for the Price
Alexandra Zelenko, Marketer and Technical Writer, DDI Development
Once you have decided on your price up, you should provide reasonable justification so your buyer will accept that. It is advisable to focus on the value of your products or services, not on the price. Buyers will agree to pay more for the value that makes sense, so you should sell features and benefits. Once you have established the value of your products or services, present your price with confidence and never apologize for your price. If you believe your price is correct, your customers will agree as well.
5. Remember to Make Your Pitch All About Your Customer
Dan Hale, Digital Marketing Expert and Owner, Cloud Inspector Web Design
One of the best ways to get customers to pay more is to ensure that you are making it all about them. Business owners tend to talk about what they can do for a customer. This is the biggest problem. The key to bigger paydays is to craft your message so it relieves their pain. Make it all about how you can improve their life by removing the problem. Make them fall in love with your solution even though it’s boring how you make it happen. And make no mistake: to them, it is boring.
An example could be a central air conditioner tune-up. Rather than pitch a “thorough 21-point air conditioner tune-up,” frame it as “an air conditioner that runs like new again.” Nobody cares about having a tune-up on their air conditioner; they just want one that runs flawlessly. This will set you apart and allow you to charge more. Just make sure you deliver.
6. Attract Customers to Your More High-End Products
Jess Perna, Owner, Jess Perna Studio
We have no idea what budget customers have in mind when they call. We show the high-end products first and then offer the less expensive options. Then, we explain that the longer it takes me to draw an illustration for them, the more it costs. It is simply based on an hourly rate. If they are attracted to the high-end items, they will find a way to pay for them. Sometimes we will throw in an option at a discount or tell them we will waive the rush fees.
7. Illustrate the Level of Effort for Each Stage of the Project
Terence Channon, Principal, NewLead, LLC
One way to convince potential clients to pay more is to always illustrate the level of effort for each stage of the project. It can be tempting to just put a single price tag on the entire proposal, but resist the temptation to do so. Break the project down into stages showing estimated number of hours and associated billing rate. This will help illustrate the level of effort required along the way, showcase to the client you have done your homework in preparing the project plan, and likely result in additional billings (usually because it’s easier to underestimate the level of effort as a whole versus when organized into pieces).
8. Highlight the Solution That Your Product Is Providing to Your Customers
Justin Zappulla, Managing Partner, Janek Performance Group
To get buyers to pay more, you need to connect the dots between their needs and how your product or service addresses those needs or solves specific problems they’re having. If you can demonstrate the real, tangible value for a customer, they’re much more willing to pay a higher price. Sometimes buyers will insist on a premature discussion of price, and in that case, you should steer the conversation back to discovering their problems and pain points so you can show how your offering relieves those pains. If they still insist, then provide them a range, with the qualifier that it scales depending on what they need to solve their issues. Then return the focus to needs discovery and the value of your solution.
You don’t want to withhold information – it looks like you’re hiding something – but you also don’t want to cave and give a price that might not be accurate. More to the point, getting bogged down in price haggling takes away from what’s really important: building trust and paying attention to the synergy between buyer needs and seller solutions.
9. Recommend Based on What Your Customers Want
Greta Schulz, Owner, Schulz Business SELLutions
People will pay more if it is “their” idea to do so. That means asking enough good questions to understand not only what they need but what they need it for, what are they doing now? How is that working and if they don’t have something better, faster, etc., what is the effect of that? It’s important to ask questions that help get them to talk about the how’s and why’s. My big $25,000 question is in response to any of these: tell me more about that. This allows them to talk more about their issues and we understand them. We can then recommend based on what “they want,” and not what “we sell.”
10. Surprise Your Buyers with the Unexpected Value of Your Product
Nicole Littmann, Founder and CEO, Aurelian Coaching
When you premium price your products or services, the key is to overdeliver on value, such as big bonuses on your products and superior quality on all of your services. Basically, any way you can surprise and delight will help to get your buyers to pay more. It might feel like more work up front, but the return can be phenomenal, making for a very good ROI on your efforts. Pro tip: get those early adopters of your premium packages to be your informal advisory board. Ask them what other out-of-the-world value they’d like to see – then deliver it, and watch customers line up to pay more.
11. Think Beyond the “Take It or Leave It” Strategy
Bob House, President, BizBuySell.com
Although it’s one of the most important tools for for-sale-by-owner (FSBO) sellers, negotiation is the area that most frequently drops the ball. The overarching principle of successful negotiation is to negotiate from a position of strength. That’s sometimes easier said than done, but in today’s business marketplace, there are many ways for sellers to favorably and accurately position themselves before the negotiation process even gets underway.
FSBO owners must remember that negotiations will evolve, and if you approach it with an open-minded strategy instead of a “take it or leave it philosophy,” you will ultimately perform much better and produce a stronger deal.
12. Use Keywords That Motivate People to Buy
Kevin Vandivier, Photographer and Mentor, Scenipic.com
I have found that there are keywords people are motivated by. A word that I use whenever I want to separate myself from my competition is “fresh.” Somehow, someway, I always work it in. It has worked as the best lure. I then set the hook with the word “free.” I always finish my negotiations with something to offer for free. Everyone is looking for something fresh and loves free to boot.
13. Become a Popular Industry Expert
Felicia Slattery, Communication Expert and Best Selling Author, FeliciaSlattery.com
Getting buyers to pay more actually happens before they ever come in to buy the product or inquire about the service. It’s about positioning yourself as the most qualified person for the job and as the most notable in your field. People would expect to pay more for a meal from a famous chef who has a TV show, for example, than they might if they’d never heard of the place or the chef. Become a celebrity in your niche or business by writing, making videos, and appearing in the media and on stages, and then watch how people begin to automatically assume your product or service is worth paying a premium for.
14. Highlight How Your Product Stands Out from Its Competitors
April Davis, President and Matchmaker, Luxury Matchmaking
The most important thing in price negotiations is making it clear to your customers why your service is better than any other similar service, and so it therefore costs more. If you can clearly explain to your customer why your service costs more and why it is better than the other services, they will be willing to pay more. Pointing out the reasons why your company is unique and will be the best fit helps the customer feel more comfortable with the price. Having a certain “wow factor” creates an excitement and want to buy. With LUMA, we are able to leverage our exclusivity. Not everyone can join as a client – they have to be approved after talking to a matchmaker in order to make sure we can actually help them.
This sales tactic makes our customers want to join more, since not everyone will be able to join.
15. Create a Bidding Frenzy and Let the Buyers’ Drive Raise the Price
John P. Powell, Chief Development Officer, Help-U-Sell Real Estate
In a seller’s market, it’s not uncommon for a house to get two or three offers quickly, depending upon the price range. In many parts of the country, there is only about four months of inventory available, and in others it’s as low as two months when the normal amount of inventory is six months.
Two great tactics:
- Let’s say your house is valued at $250,000. List the house at $235,000 instead to create a bidding frenzy and let buyers play out against one another. This puts you in the driver’s seat.
- The other option is to create anticipation and curiosity for your listing by hinting at it on the MLS for about a week in advance. Create a listing that says “coming soon” for a week, then host a big open house and you will create a ton of traffic and leads with another possible bidding frenzy.
16. Price Negotiation
Uwe Dreissigacker, Founder & CEO, InvoiceBerry.com
Information is your best weapon when it comes to negotiating a price. Before anything happens, understand what you’re purchasing and what it is actually worth. Look at competitors, see what they’re charging, and what the associated manufacturing costs are. Going in with this knowledge will allow you to fend off any unreasonable offers.
During the negotiation process, do whatever you can to get the opposing party to name the price first. It’s good to have a general understanding of what they may expect and their suggested price could be lower than what you considered offering initially.
Being amicable throughout the negotiation is highly suggested. There is a saying: “If you are planning on doing business with someone again, don’t be too tough in the negotiations. If you’re going to skin a cat, don’t keep it as a house cat.” – Marvin Levin.
One thing to note about negotiating for a price is that, as a seller, you need to have a predetermined walk-away point in every transaction. According to the author of the article, not considering the option of walking away from a negotiation can make it easier to give in to a buyer’s demand just to make a deal. Which is why setting your expectation of having to leave without closing a deal is important for buyers to see your commitment to your product or service. Read more about this topic from this article.
One cause for a customer’s hesitation to agree to your negotiated price is having your competitors as an option on the back of their minds. By knowing your competitor’s product and their customers, you can be prepared with the information that can remove the hesitation from your potential sale and make pricing decisions accordingly. Show how your product or service is better than what others offer, and it will be much easier to get customers to agree to a higher price.
As a seller, your objective is to convince buyers that the value of your product or service is worth more than its listed price. This is an important point for homeowners who want to get more for their property. Find out how to make your home attractive to buyers in this article.
It’s not unusual to hear buyers say that a product or service is too expensive, but some sellers are still unprepared and lack a well-crafted response to this objection. There are a number of ways to handle this, and knowing which one works for you will spell the difference between a closed deal and a cancelled transaction. Read this article to find out how.
Buyers also employ negotiation strategies that have been developed over time. It is the seller’s job to identify these strategies and be prepared with their own approach to convince buyers that they are getting more value than what they are paying for. What do you do when the buyer goes silent or becomes difficult? Check out this article to learn how.
A smart real estate agent will not narrow negotiations down to one issue. This is something that homeowners should remember because the key point of hiring an agent is to help create a win-win situation for their client. But not all real estate agents are the same, and you might be missing out on a good deal if your broker isn’t prepared. Here are four top negotiating tactics most real estate agents don’t know.
Simply put, if you’re not prepared to justify your product or service price to potential customers, you shouldn’t be selling at all. Be sure that you are prepared with data to that will emphasize the value of your product or service. Once you have the product knowledge down by heart, you should be able to adjust your presentation easily to fit the personality of your client. Read more to find out.
A formal letter makes for an impressive way to negotiate pricing. It also implies that you are a professional with a credibility that reflects on the quality of your product as well as the integrity of your pricing. However, some sellers who are great in person don’t always translate as well on paper. This article gives a step-by-step guide on how to write an effective price negotiation letter.
Kellogg faculty made an extensive research on why you should be the first one to state a price during price negotiations. Not only is there no data that supports letting the other party open first is a good strategy, but results of Kellogg faculty research showed that there are significant benefits for making the first offer. Read all about it in this article.
Over to You
No one wants to be caught in a negotiation deadlock that wastes everyone’s time and effort. Consider these tips from the experts the next time you find yourself in one to ensure a successful transaction that creates a win-win situation for both parties.
Want to add more to our list of price negotiation tips? Share it with us in the comments.