Negotiation: The Final Frontier of Good Pricing

Source: VeraSage Institute

The following includes excerpts, reproduced with permission, from Ron Baker's review of Negotiating With Backbone, by Reed K. Holden.

The final frontier of good pricing is the customer negotiation, and Reed explores this with verve, and an enormous amount of tacit knowledge accumulated from years as a salesman and pricing expert.

And this advice needs to be shouted from the rooftop:

Discounting is a fool's response. Those who live and die by discounting don't live very long. Trad[ing] margins for revenues, they undermine the success of their business, which needs profits more than revenue to survive.

The most important strategy, though, is to know your value, and to be an equal with procurement, not a supplicant. Only equals can negotiate. If you don't know your value, procurement will drag you to the one topic they know well: price. You must change the conversation to value.

The book documents eight different scenarios you can find yourself in. You'll learn excellent strategies for dealing with price buyers, value buyers, and relationship buyers. The tough buyers are the poker players, who are value or relationship buyers in drag.

Counterintuitively, price buyers may be the easiest to deal with, since at least they are upfront about their expectations of the lowest price. Reed cites research that only 30 to 35 percent of buyers were real price buyers, and that's in commodity markets. For professional firms, it's much less, probably single digits.

Even if you don't deal with procurement, you will learn strategies from one of the world's foremost pricing experts.

For the complete review, read “Book Review: Negotiating With Backbone.”

From VeraSage Institute, July 8, 2012, http://www.verasage.com/index.php/community.