Pre-discounting is where you lower the price of your product/service before presenting it to the customer because you feel it won't be acceptable to them.

Of course this means lower prices, margins and profits based on an ASSUMPTION the customer will react adversely to your price proposal.

We know in most cases price is just one, and very rarely THE, buying criteria for people, so customers may not be worried about price. Indeed if we have done our job well in the value conversation then based on the value and outcomes we'll deliver for our customer, they will be willing and happy to pay our price.

So why reduce it before we have even spoken to them?

Don't - work out your value based prices, present these to the customers, then justify value and get the prices you deserve.

We don't like talking about money, we don't like to discuss how good we are, we don't like conflict or disagreements -this can make our value and price conversations and negotiations difficult to navigate.

We want a smooth journey from customer conversations to pricing proposals to winning the deal, not challenges.

For this reason we find these types of conversations emotional - what if I lose the deal, what if the customer doesn't like the price, what if I miss my targets.

And this can lead to margin destructive behaviour, we try to avoid the discussion which often leads to a lack of value communication and discounting - which of courses reduces prices, margins and profit.

So what can we do to avoid this and manage our emotions better?

It can be an approach that is accepted as the right pricing approach however it may not be – it could be your customers quote market prices which are not optimum (and lower prices are always in their best interests), market prices may be based on outdated information or perceptions or your competitors are simply following each others pricing and nobody is right, it’s all guesswork.

It’s worth thinking about whether or not a market based pricing approach is the right one.

Episode Notes

I call it the Negotiation Variables Value Mapper - a simple tool based on the principle that in a negotiation we shouldn't give anything away without getting something back in return.

"If you can do this for me, I may be able to that for you"

Of course we can make concessions where and when we need to, however we should trade areas of low cost to us and high value to the customer, in return for any concessions we want to protect our position with aspects of the deal that are of high value to us. These are the things we ask our customer for.

Preparing two lists - 1. what we can ask from the customer and 2. what we are prepared to give them are crucial in this process otherwise we run the risk of giving too much away too soon. Prioritise these lists in terms of cost and value.

If you create this tool and use it consistently it will help you protect your margins and value in the deal.

Value negotiating is focused on the idea of negotiating using your value - the results and outcomes you help your customer achieve through your products and services as the main source of strength or leverage in the negotiation.

This may not sound too dissimilar to other definitions of negotiating, however we know that as Price is THE most powerful profit lever you have, an approach that emphasises value and not price as the key lever in the negotiation stands much better chance of protecting margins than any other approach.

Over the course of future episodes we'll explore this in more detail and give you some frameworks and tools that will help you in your value negotiating.

Discounting may be useful in some limited circumstances. If we do decide that discounting is ok then we need to make sure we do it in the right way.

By managing how you discount and who to will discount to, you will be in a much better position to secure and protect your prices and margins.

Don't discount without a good reason, do the numbers first and understand the impact on your market and customer positioning. If you do decide to discount your prices, do it in a controlled way that delivers the objectives you want.

If you want to win more deals more often at higher prices - manage discounts and price reductions.

These three tips will really help, they've helped me and my clients get the prices we deserve. They will give you more confidence, and this confidence will translate to the customer in terms of their confidence that you can deliver the results and outcomes for them.

They will not only help achieve the prices you deserve, they will also give you more confidence to talk numbers.

And make this part of the value selling process easier, simpler and more enjoyable, yes enjoyable.

Oh and the bonus tip is crucial!

Value can mean different things to different people, we all value things differently.

So if we want to be more concise and clear in our language, using some other words and phrases may be more useful. 

This episode will give you three other words you can use that will have an impact in your value conversations, increasing your chances of getting the right message understood by your customer as you discuss what you can do for them in their business.

Customers won't necessarily 'get' the full value of what we deliver for them through our products and services, they'll have many things to think about and supplier performnce is just one. If they're happy with you they will know it, but not necessary just how value you are to them.

So it's up to us to make sure our customers really understand the value, results and outcomes we help them achieve. And if we can quantify this and monetise it then we're communicating our value in a powerful way.

This episode will give you three reason why this is so important, one of which makes winning future deals at higher prices much much easier.

In order to be able to 'value' price effectively we need to be able to understand value in our customer's terms.

In the third episode in this 'mini' series I talk about how you can begin to identify what is important - or valuable to your customers - in the more intangible areas they may be interested in.

Sometimes outcomes and value may not be measured or quantifiable in terms of money, improved conversion rates, win/loss ratios and so on.

They are more difficult to put a figure on, issues like feelings, or a sense of safety and reduced risk.

However these are all areas we need to consider when understanding what outcomes and value means to our customers because we know people buy on emotions as well as rational drivers.