More for the Same

The most popular customer negotiating tactic since in the beginning of time is The Same for Less (TSfL). That is to say, “I’ll buy whatever your selling, if you reduce the price.”  The easy answer, assuming you have adequate margin to absorb this request, is “Yes”.  “Yes” takes the deal off the table, “Yes” helps the customer feel like they got a good deal, and “Yes” allows you to move on to another opportunity.

But a better tactic for you, your company, and maybe even your customer is More for the Same (MftS), which usually appears as a counter-offer to TSfL.  The basic (and obvious) premise behind the MftS tactic is that instead of lowering your price, you offer your customer additional goods or services for the same price.  It requires guts and creativity, but offers some interesting benefits:

  • Price (per unit) Protection
  • Top Line/Commissionable Revenue Protection
  • An Opportunity to Grow Wallet Share by “seeding” other products or services

To illustrate the Revenue and Commision Protection benefits, consider the following examples:

Example 1:  You have provided a customer with a quote for a $1,000,000 solution @ 50% gross margin.  Your customer asks for 10% off of this quote in order to close the deal.  You agree.

After discounting, the new price is $900,000, your gross margin falls to 44.4%, and your revenue falls by $100k.

Example 2: Instead of agreeing to a price reduction of $100k, you offer to add $100k of additional goods and services to your quote at no additional charge.  Your customer agrees.

After this concession, your price remains $1,000,000, your gross margin drops to 45% (assuming an equivalent margin of the conceded product), and the revenue you recognize, for quota attainment and revenue retirement, is not impacted.

It isn’t easy, but if you are successful at changing your customer’s buying habits from TSfL to MftS, you’ll wind up retiring more revenue and hitting your quota sooner than ever before.

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