Are you discounting or negotiating?


On too many occasions I see people, and often they are actually called sales people, discounting believing they are negotiating. And yet these words mean two very different things:

Discount: deduct an amount from (the usual price of something).”
Negotiate: obtain or bring about by discussion.”

To my mind a discount is something that should only be given when it has been predetermined to do so. In other words, the business has made a conscious decision to reduce prices in order to increase the volume of sales.*

On the other hand negotiation, obtaining something by discussion, happens all the time – at least it should do.

If you google “the rules of negotiating” you get 68,900,000 results or options and the first page includes “the 15 rules of negotiating”, “the three golden rules…”, “four rules..”, “five rules…” there’s a lot of rules to negotiation. So at the risk of adding a 68,900,001st option here are my three:

  1. Know before you start what it is you want to get. What does a great outcome look like? I’m amazed how many people start negotiating without having worked out what a good deal looks like for them. What are the non-negotiable(s)? What are the things you can concede? What are the things that really don’t matter that much at all?
  2. Find out what your customer/client/prospect wants. The only way to do this effectively is to ask questions. The more questions you ask the more you’ll get to know and the more you’ll get to understand. Have these questions prepared, know in advance how you’re going to ask them.
  3. Seek third alternatives. Sometimes people can negotiate themselves out of a great deal. I know, I’ve done it myself. Be alert to the possibility of an outcome that’s better than the one you or the other party were aiming for. This can be a great tool to use after you’ve reached agreement. Let’s say you’ve struck a deal that both sides are happy with. What if you were to then say, “look we’ve agreed a deal and I’m happy to stick with it as I know you are but are you prepared to work with me now to see if we can agree something even better for both of us?” Only a fool would say “no” particularly if you clearly state that if a third alternative, something better can’t be found then you’ll revert to the agreement on the table.

When any member of your team “negotiates” a deal ask them “what did you negotiate?” I’ll give you 10-1 odds they discounted and got nothing in return, which gives you the opportunity to introduce my three rules if you choose to.

*When people discount they rarely sell as much as they hoped to, conversely when raising prices they rarely lose as much business as they fear.

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