Thoughts on ITA General Session – Negotiation

Over the next few weeks I will be posting my thoughts from sessions that I attended at the Information Technology Alliance’s Fall Collaborative (<—I love that word) held in Palm Springs.

In the first session entitled Negotiating: The critical skill for success in a soft economy, Jack Kaine delivered an excellent presentation including some of the following good thoughts:

  • Bargaining is about who is right; negotiation is about what is right.
  • Win-win is about mutual gain, which is not to be confused with equal gain.
  • Bargaining presupposes a zero-sum game like poker; negotiation presupposes the ability to grow the pot beyond what is at the table.
  • The sooner you quote price the lower it will be and be proud of your pricing!
  • When you lower your price unilaterally you are saying you are a commodity.
  • Do not bargain with yourself! Discounting indicates a lack of self-esteem.
  • Saying something is "fair and reasonable" is a subtle way of calling the other party, "unfair and unreasonable."

9 thoughts on “Thoughts on ITA General Session – Negotiation

  1. Have been thinking about discounts and promotions a lot — especially with regards to professional services. I think “lack of self-esteem” is a big problem. One would not dream of asking a doctor, lawyer or CPA for a discount. So how does the technology services person increase his/her self esteem and respond to the request for a discount?

  2. People ARE asking CPAs for discounts these days. The trick is to reduce the deliverables rather than cutting price for the same list of services. People are really shopping for value so you have to make it easy for them to feel that they are making a good decision. Same stuff that you guys have been preachin’ and teachin’ in every economy still applies.

  3. Great response, Geni (evenanerd). The key is not to unilaterally reduce price on the same service or knowledge transfer engagment. It is related to options pricing –> http://edkless.com/?p=223. Sorry for the self referential post.

    The language sounds something like this, “Yes we can reduce the price, but what do you want to take out of the proposal.”

    I maintain that once you put forward a price, you should never renege on it. To do so, is to admit that your price is not your price. In short, you are a liar.

  4. It’s chicken/egg – is the prospect to blame for expecting discount and/or are we to blame for giving the prospect a discount? I am averse to the discount game in professional services. But if this dance is anticipated, do you help or hurt your business by laying out the ground rules in the beginning? Would I starve to death if I said, “I am a professional offering services to a critical area of your business. Given the time, expertise, and attention this requires, the pricing I provide is accurate and not with fat built in for discounting. My services cost what my services cost. The fact that Brand X is willing to discount is irrelevant in the solution/service I am bringing to the table.”

  5. People that tend to bargain with themselves have a conscience that causes them to look at their charges as if they were responsible for paying with their own money. It can be a challenge to get them to look past this and understand the value that they provide through their services. Yes $20k might be a lot of money to them personally but would they feel differently if this expenditure resulted in $250k annual cost savings. It is hard concept for some to grasp because they only see the expense and not the return that is realized by their customer.

    As far as establishing a price and sticking with it, the key here is to believe in your price. If you truly believe in your company and have a clear understanding of your prospect’s objectives then it is much easier to stand your ground by not renegotiating price without renegotiating the deliverables. A firm price should never be offered until you have met both of these criteria first. Waivering in the end will result in you losing your credibility while setting the tone for all future negotiations with this prospect.

  6. @Tommy – Excellent! Well said.

    @Dawn – I think in the end you help yourself by stating that you will not discount from the outset. I am not sure if he still has it on his Web site, but at one point Wayne Schulz used to have something that read something like this, “If you are interested in purchasing MAS 90 or services at a discount, go to Google and type: ‘MAS 90 + discount’ and don’t call me.

    This is where the self-esteem comes in. If you think you will never land a customer without having to discounting, you always will discount.

  7. Good for Wayne!!! I think he’s saving himself a lot of heartache. My thought is that if you begin the relationship that way, do you ever really have respect in the relationship? Are you ever going to be valued? I think it’s the short path to much misery and an eventual, inevitable breakup.

  8. Often times, I will tell a prospect that the sales process is a lot like the courting process. I let them know that while they are comparing my products, my company, and me that I will be evaluating them, their company and their operational requirements as well to determine if I believe we are a good match. I believe that by managing expectations throughout this process you are laying the foundation for the negotiations phase with an eye on a mutually beneficial outcome.

  9. @Tommy, right one. The golden rule of capitalism is that the benefit of another is also one’s own. Without a free choice to enter into a mutually beneficial relationship, we either have socialism and/or slavery.

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