Managing Price Negotiations – Strategies for Tough Times & Falling Volume Context

Part of this new VUCA/BANI world is that it is tougher and tougher to read the market and to know when the next crisis will come.

Remember that when a crisis appears it generally create a drop in demand. When it happens, price pressures arise, and your clients will likely push hard for discounts. However, dropping prices too quickly or too far can damage both your margins and your perceived value. Here’s how to manage these difficult price negotiations while maintaining healthy client relationships.

From Vincent Parachini, Halifax Consulting LATAM Managing Partner

1. Stay Calm and Confident

When faced with tough price negotiations, the first step is to remain calm and confident. Clients can sense hesitation and might press harder if they feel you’re vulnerable. Confidence in your pricing and your solution’s value is key to holding your ground.

2. Build on Trust and Transparency

Be open about your constraints and challenges. If you’re unable to meet certain price demands, explain why. Clients appreciate transparency and will be more likely to work with you if they understand the reasoning behind your pricing decisions. This builds trust, which can ease some of the pressure.

3. Offer Value-Added Services

Instead of reducing your price, consider offering value-added services that don’t significantly impact your costs. For example, you can provide extended support, additional training, or faster delivery options. These perks can enhance the perceived value of your solution without cutting into your profit margin.

4. Reframe the Conversation Around ROI

Shift the conversation from price to return on investment (ROI). Show your client the long-term benefits of your product or service, focusing on the positive impact it will have on their business. When clients understand the value of what they’re paying for, price becomes less of a sticking point.

5. Defend your Pricing Structure Hammering your Client’s TCOs 

Refuse to enter the price war and negotiate dimensions independently (salami technique). Remember your DEAL Method® negotiation training. Defend your current pricing strategy but raising awareness on the Total Cost of Ownership of your solution and its competitive or substitution alternative. When customers become awareness of direct and indirect switching costs, they generally lower their ambition in the negotiation. Help them to materialize and quantify risks.

6. Flexibility Over Discounting

If a price reduction is unavoidable, offer flexibility rather than a flat discount. This could be in the form of phased payments, longer contract terms, or bundled services. Flexibility shows you’re willing to work with the client without undercutting your overall value.

7. Be Tactical about Volume Opportunities Capture

Of course, it comes a time when you need to make trade off and secure the necessary volumes to keep the factory / operation running. But you must be selective so that you do not jeopardize your long-term pricing strategy and value drivers. Plan it for ceasing the most Strategically-adherent latent opportunities, strengthening your most strategic accounts on concessions that are least painful to you.

8. Know When to Walk Away

Not every client is worth fighting for at any cost. If price negotiations lead to unsustainable demands, it’s okay to walk away. Focus your efforts on clients who see the value in what you offer and are willing to pay a fair price for it.

9. Maintain Your Long-Term Pricing Strategy

While it’s important to adapt to the current market, avoid making pricing decisions that will hurt you in the long term. Stick to your overall pricing strategy as much as possible and avoid slashing prices in a way that could devalue your brand or harm future negotiations.

10. (Re)Train your team and rehearse negotiation techniques

When business is slow and stakes are high, we tend to panic and forget our practices. Call your Halifax Consulting partners, scheduled a DEAL Method® workshop focused on securing prices in a volume depletion context. It will help the team to build confidence and frame the upcoming negotiation with the same approach to the market securing a more effective move.

Trust your strategy, trust your training (or get one!) and trust that all crisis end. Your objective is to hold the longer and the most effective way.

About the author:

As Managing Partner for LATAM at Halifax Consulting, Vincent is dedicated to driving strategic growth and enhancing business productivity in Latin America. A former CEO with over 15 years of experience in managing international businesses at BIC, 25 years in sales, and 8 years in training and consulting, he is passionate about helping companies achieve their goals through customized solutions and practical insights.

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