Good news: You don’t need to haggle. Haggling is a terrible way to reach an agreement; the outcome is never ideal, there’s always a winner and a loser — more likely, two losers. That’s why it feels uncomfortable.
The alternative is negotiation, a process for coming to an agreement that allows for win-win outcomes.
Several years ago, in a negotiation class, I had to negotiate with someone to figure out who would get an orange. Each of us had written instructions with objectives and neither of us could accept a 50/50 split.
It took roughly half an hour for us to realize that I needed the peel and she needed the fruit. We agreed to peel the orange, give me the peel, and give her the fruit. Win-win.
The lesson is to focus on needs rather than positions, such as wanting a lower price.
Effectively Respond to Haggling
There are four reasons prospects typically push back when it comes to a quote — or a combination of these:
- The perceived risk is too high. They are concerned you won’t deliver.
- Your offer doesn’t address their needs.
- They can get a better price elsewhere.
- They always haggle on price to see what they can get.
Your response should be to better understand their needs. Ask why the price is too high for them, what their needs are, and where does your offer fall short? Their response will leave you with three options:
- Reduce perceived risk by offering a risk reversal or guarantee.
- Better clarify how the offer addresses their needs, or clarify needs they don’t understand.
- Adjust the offer so that it better meets their needs.
Watch Your Step
Adjust your offer with caution. You should enter the negotiation knowing what you can and can’t change.
Do not agree to a 10% reduction for removing bullet seven from the scope. Doing so never reduces your cost to deliver, but the price concession is permanent.
Jeff Loehr
Reducing your price to match a competitor’s is also dangerous. There’s either a reason it charges less, or it won’t be able to deliver. Leave the negotiations and check in with the prospect in six months.
This brings up your last option: walking away.
The Haggle Alternative: BATNA
You should enter a negotiation understanding your best alternative to a negotiated agreement (BATNA). When the value of the contract you are negotiating is less than your BATNA, walk away.
Often, your BATNA will be to work with another client that is a better fit. The more precisely defined your target market and specific solution, the easier you will find these clients — and the easier it will be to walk away.
Knowing your BATNA also strengthens your resolve when the prospect is pushing you on price to see what they can get. You know your value, and you know you can find someone else, so smile, shake hands, and get out of there.
Half the time, they’ll call you while you’re starting your car or getting on your next call. At that point, you decide if you want to work with them.
Jeff Loehr is CEO of Start Grow Manage. He and his partners help MSPs get more MRR, profit, and value from the business without the endless hustle and technical grind. The deep has deep MSP, business, and investing experience. Get to know more about Loehr on channelWise.
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