One of the most common questions we get from audiences at our “Sales for Startup” events is about price. So in one of the recent events, we decided to tackle it head on and take it up as part of the panel discussion. Specifically – How to deal with price negotiations?
In this particular panel discussion, we had Philip Tnee and Sarah Hales as two of the panelists. Philip, a former Facebook Client Manager, now heads sales at Purpleclick Media, a leading SEO and SEM company in Singapore. In these roles, he has had the chance to work with various organizations across different markets.
Sarah Hales is Sales Manager at Dragon Law, a firm that provides SaaS based legal services for businesses in Southeast Asia. Since the time that Sarah joined Dragon Law, she too has worked with diverse teams and organizations across different fields and industries in the Asia-Pacific region.
You can see the videos of the event, and the transcripts of this panel discussion are provided below with valuable sales tips for price negotiations.
How to deal with price negotiations
Zal: So Philip, I just wanted to ask you, now when we talk about, when we ask the audience one of the common questions that we’ve got was – How do you deal with, and this is Asia, so how do you deal with negotiations? Every single person wants a bargain, everybody wants a deal.
Philip: Negotiations with the Asian guy, Right? Yeah, okay so… Yeah I mean, you know it’s different here.. I mean here it’s so often and it’s started down here, but that’s the truth of the matter… I mean……back when I was doing selling, that’s why i’m still selling, even though I manage, but you have people closing over the phone, you know everywhere else in the world. But over here, you’ve got to step through that door, and what gets you through that is, it’s already challenging enough, and when we get to the stage of negotiation, I mean, a lot of the time, a lot of discussions, no matter who you are, revolves around price.
But, you know … I always tell the teams that I manage, that look, during sales and especially over here, it’s like getting into a relationship, you really wanna find out what the other party is looking for, or what drives them, what interests them, what their problems are, what their pain points are.
And a lot of the time, what it comes down to it, it’s really just assurance they want more than anything else, but it’s finding out which area of assurance they need the most – that is usually the problem.
So it’s usually a bad experience with another vendor or agency, maybe previously. It could be down to specific kind of deliverables that they have no way of illustrating, or rather, they can’t illustrate clearly to you through their engagement …and so I think it just asks for more fact finding when you’re faced with negotiations and price slashing kind of conversations and that’s what it really comes down to.
Zal Dastur: We had a client who was based in India. We did a promotion where we said ok if you sign up now and if you paid right now, which was in the first month that we launched, you’ve got $2 per user, per month, right. Which is literally you are paying 10 % of our actual price, you are getting 90% discount.
Friday night, the guy called me up 6 months after that promo had ended, saying – I saw the promo, I want to get this, but I don’t wanna pay 2 dollars, I want to pay 1 dollar.
And I was like, I can’t do anything, you know, that promo ended. Plus, like, you’re shameless. Like, really, is a dollar a difference? But I think for someone, it’s just like they want to be able to say, yeah, look what I did – This guy told me this price and I knocked it down. I think, when they expect you to negotiate, and you know, we are in SaaS business, you know, people don’t negotiate in SaaS, there’s no product prices on the website, right. Like, there’s no discount coupon or whatever, so it’s really an interesting challenge when you’re dealing with customers for that …
Sarah Hales: One place that we competed..the negotiations part, we gave to salespeople different tools to negotiate with – different packages, things like that. So, we don’t discount our base rate, but that’s our subscription rate. But in case of things, I mean, from Dragon Law you can add organizations, you can add users.
We have a pay fee for document automation. Those are the things usually that – add a company. Add a user, don’t actually cost the business at all. So literally just a click of a button on the technology. But its giving the sales people a way to negotiate with someone without having to take down the base subscription price.
Zal Dastur: I think that’s very good advice, talking about what else can you offer. You don’t have to talk about the price, but maybe it’s like a little bit longer warranty or something like that, something that you can put into that, that makes them feel that they are getting more value than they were to start with.
Philip: Just to add to that as well, I think it also depends where you’re coming from as a company, right? Like, if you are working for, let’s say Facebook, or you’re truly a startup, and you know that you really need this business and you need a client much more than client needs you at that point…
One thing, is that, I’ve..because I’ve moved into a smaller company, right now, and one thing i’m training the salespeople to do is, not just to sell to clients but also to sell internally.
And I always set them up for, like, a pitch, to me, and ask – Come up with a custom view structure, right? And maybe, yeah sure, go for a more aggressive margin, with a certain client, but get a certain commit on future spend or something, and get it signed off or get it agreed in black and white, at the very least. And pitch it to me and run it through me, before you run it through the other partners of the company, which you know you have to jump for approvals through, you know. And I think that’s something that’s worked out well, because you know, with salespeople you tend to get the more creative types sometimes, and they will just find a way to bridge different gaps. You get different solutions that way