A negotiation between buyer and seller is a delicate process that can create a lot of stress for a seller. But the fact is that deals often lead to negotiation even if they’re well-constructed, and negotiation is an essential part of the sales process. So, it is equally essential for salespeople to know baseline negotiating tactics.
Negotiation in Sales
Sales negotiation refers to the process of a buyer and seller working together toward the end goal of arriving at a deal. Negotiation requires preparation and care, and sellers must balance the accommodation of the buyer while maintaining a position that allows them a financially viable deal. While stressful, negotiation is an important skill in sales, allowing both parties to reach the best agreement. For a successful negotiation, both buyer and seller must prepare concessions to reach a reasonable compromise.
Such a compromise isn’t always viable, of course, and sellers need to understand where they stand so as to not make unreasonable concessions. It’s important to never need to take a deal or else a buyer may take advantage of that and leave you accepting a deal that isn’t fair. By approaching sales negotiation with the proper mindset and amount of preparation, you will be better equipped to handle effective negotiation and know how to negotiate a price as a seller.
Why Sales Negotiation Is Essential
Negotiation is an important part of sales for several reasons, the most important being the end result: an agreeable deal that benefits both parties. This way, buyers and sellers can discuss value and prices without conflict or frustration over unfair deals, hopefully coming to a resolution. Sales negotiation also creates better relationships between buyers and sellers and establishes sellers as invaluable communicants and resources for future partnerships.
Important Skills in Sales Negotiation
- Preparation Plans and Outlined Concessions
You must come to negotiations prepared, knowing about the opposing party’s buying power and motivations and using that to have some key parts of a plan. The more you know about what the buyer is looking for and what their price range is, the better you know how feasible further negotiation is. You also have to know your own limits and concessions you’re financially willing to give. By clearly defining your concessions beforehand, you’re less likely to accept a deal that isn’t within acceptable margins and make your buyer work for concessions. This doesn’t apply only to price tags but also to other additions that change the value of your deal but not the price. Establishing your objectives and potential deals will assist with negotiations and create a better result and easier conversation. Knowing the limits of both yourself and the buyer will equip you with the knowledge of how to navigate the negotiation.
- Always Be Willing to Walk Away
It’s important to know your value and the value of what you’re selling. If the deals offered to you over the course of negotiation are unreasonable or unprofitable, you can walk away from the negotiations. You never have to accept an offer, and confidence in your other options will help you navigate sales negotiating from a better vantage point. The knowledge that you can leave this deal and find a better option elsewhere will be clear to your buyer. If you act as though you need this deal and will concede a lot for it, your buyer will know that too. The more confidence you have during sales negotiation, the less likely you will be taken advantage of.
- Know the Value of What You Sell
If you must, back up the value of what you are selling with the expected market price and the value of it beyond the price. While you should be prepared to discuss and have back-and-forth conversations, you shouldn’t cave at the first request to lower your price. Sell the value and benefits of the product and make clear where you stand while being understanding.
- Listen to Your Buyer
It can be hard to know whether to speak first or speak second. True, speaking first will allow you control over the discussion and give you anchoring bias in the negotiation. But it’s also true that speaking second will allow you to hear what the buyer is hoping for and gather further information. Your technique here will depend on your experience and your ability to assess the situation for what the buyer needs.
Allowing your buyer to openly talk about their wishes can allow you to be more accommodating. Listening to the buyer can allow discussions to play out longer, which is also helpful for addressing numerous options. It also helps you build a rapport with your buyer. The more options both parties talk through, the more shored up the final agreement will be. Even if nothing is signed by the end of negotiations, a verbal agreement is a good first step in gaining commitment from your buyer.
- Don’t Be Rash
When negotiating, you need to be clear and know the compensation you deserve. It can be tempting to split the difference between your initial offer and a counteroffer, but that’s often a bad deal for you. Be patient.
- Negotiate a Win-Win
While a seller should be accommodating, that doesn’t mean you should give in to every demand. Buyer and seller should be working towards a win-win solution, where both are on equal footing and are negotiating for mutual benefit. Both sides should be making requests and accepting concessions to work toward a win-win end goal.
- Keep Your Composure
By allowing the conversation to stay jovial and light, you are more likely to end up with satisfied customers and keep a professional reputation. And staying calm even throughout the stressful process of a sales negotiation, you’ll leave the door open to a potential returning customer or other long-term partnership and resource.
Learning to Master Sales Negotiation
The more you know about how to negotiate price as a seller, the more you will grow in your knowledge and handling of future deals. At Shapiro Negotiations Institute, we know the world of sales and negotiation and want to use our expertise to help you make better negotiations and close better deals. Contact us to discover how we can help you strengthen your skills in negotiation, sales, and influence.