Acceptable Negotiation Practices (Sam vs. Jen)

Moderator:
Sam and Jen, your topic of debate has to do with acceptable negotiation practices. Is it acceptable to falsely inflate your initial price in order to discount during negotiations?

Sam:
People buy from people they can trust. If you cannot be forthright with your pricing, then the trust factor is absent. I have watched some of my colleagues inflate their prices by 20%, then offer a so called “15% discount”. The customer is deceived into thinking they are getting a deal, when in reality they are paying too much. That is not negotiating, it is stealing. This practice is a crutch for the simple-minded, who do not know how to truly position and sell value.

Jen:
Sam’s position comes across as pure nobility, but I think it is sheer stupidity. I don’t know about you, but I don’t like to leave money on the table. If the customer agrees to a certain price – whatever it is – then they must feel they are getting enough value for their money. Otherwise they would not buy. Every buyer wants to know that they are getting a discount. If you begin pricing at list, then you give yourself very little negotiating flexibility. Company A may get $1M of value from your product, while Company B gets $10M of value from the exact same product. In this case, even if you double the price Customer B will still get ten times the value! Many pricing structures do not take this into consideration and list their products for exactly the same price in both cases. To not inflate the price, is to do a disservice to your own company.

Sam:
And what will you do when Company A and Company B meet at your next conference and trade notes? You just might lose company B altogether! Would that not be a disservice to your company?

Jen:
Chances are Company A and Company B will have bought at 2 different times, with very different specs. They will not be able to compare apples to apples. And if they do, they should compare value, not price.

Moderator:
Readers, what do you think? Do you agree with Sam or Jen? Join the debate and post your comments.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: