Salespeople and inside staff in technical organizations often know in detail what their product can do, which customer needs which version, and what matters in practice. That knowledge is invaluable. Yet, many companies observe that discounts are offered too quickly at the time of pricing. This pattern is recognizable in many teams. The knowledge is readily available, but the step that is often missing is translating that knowledge into the customer's actual benefits. Those who can do this present their pricing with conviction. And the customer hears it.
Where does the doubt regarding the price come from?
The doubt arises because salespeople view the price based on their own costs, whereas the customer looks at the return on investment. An inside sales representative knows how many hours, materials, and coordination go into an order. As a result, a price can quickly feel high. The customer calculates with very different numbers: downtime avoided, downtime eliminated, a project completed on time.
It is precisely those who genuinely want to help their customers well who often struggle with this. Research into price negotiations shows that customer-oriented salespeople create more value for their customers, while simultaneously being more willing to compromise on price. They want to meet the customer halfway. Their commitment is a strong foundation, as long as they also openly state the value they deliver.
How does a customer hear that you are hesitant?
A customer detects doubt through subtle signals around the time the price drops. For each signal, there is a simple alternative:
- The amount sounds like a question. State the price as a fact and let your voice drop at the end.
- An explanation follows immediately after the amount. Provide the justification before the price. After the amount, remain silent.
- The silence is filled. Wait for the customer to respond, even if it takes five seconds. His response tells you where he stands.
- The discount is applied even before the customer asks for it. The first amount mentioned becomes the starting point of the negotiation. Whoever names a discount themselves lowers that starting point even before the conversation begins.
Moreover, professional buyers almost always ask for a discount, even if only to test the product. A request for a discount is therefore primarily a question, and says little about how satisfied the customer is.
How do you translate expertise into value for the customer?
You translate expertise into value by calculating together with the client what your solution yields for them. Technical knowledge is particularly helpful in this regard, because whoever knows how an installation works also knows where the money is. Questions that help with this:
- How much does a one-hour standstill on this line cost?
- How often does it go wrong, and what does that cost in terms of repairs or rejection?
- How many hours are your people spending on this now?
- What does a one-week delay mean for your schedule or your client?
An example. A part costs 12.000 euros; the competitor offers 10.500 euros. The customer states that an hour of downtime costs him 2.500 euros. The more expensive part is expected to prevent four hours of downtime per year. In that case, it saves the customer 10.000 euros every year, compared to a one-off price difference of 1.500 euros.
When the customer has provided the figures himself, the price becomes a logical part of his own calculation. He often uses those figures internally as well to justify the purchase.
What can a manager do?
A manager makes the difference by making margin visible and openly standing behind the price. Research shows that customer-oriented salespeople only convert their value into a better price if their manager indicates that the price is justified. Moreover, teams that are also rewarded based on profit are less likely to offer discounts. In concrete terms, this means:
- divide the gross margin per customer and per order, and not just the revenue;
- Discuss the best margins in the work meeting alongside the largest orders;
- agree on who may give which discount and what is required in return;
- Tell your team that the price is correct, and explain why.
How do you practice this in a training?
The greatest impact is achieved when participants listen back to themselves and work with their own clients. In Anja’s training sessions, participants first calculate the return a real client brings to that client due to their product or service. Then, they practice the pricing negotiation using camera recordings, with a client asking for a discount. When watching back, they hear exactly where their voice rises or where they offer a discount themselves. In the next round, they state their price, allow for a pause, and trade rather than give in. Their expertise is then at the service of the price, and this is reflected in the margin.
