How do you respond to customers that are always bargaining the price?
I’m a freshman with international trading, there are some customers always bargaining price although my margins are very low. How should I reply them? (Other than talking about the good quality).
Lily, the nature of some cultures is to negotiate. I am not sure what the exclusivity is of your products or if your pricing is relative to market you are at. I also do not know how you reveal your pricing, (Is it on a website or do people call and ask?) so without that information I make two suggestions:
1.) Show your price and a market price to support that you have already discounted.
2.) Find out what their issues are and why they are even negotiating with you in the first place. What factor other than price is there that you can negotiate?
Being blunt (but polite) about your margins is fair. Tell them your pricing is the best you can do. Ask them where they can get better pricing and how do they think another distributor can offer a better price?
Best of luck, Jim
Whilst in principle, I agree with Blaine - that you should fire the 'wrong' customers - it may not be time yet. Especially if you are starting out.
As many others have said, negotiation s a part of good trading, and more prevalent in some cultures than in others.
So my advice is this: 'Never a Naked Concession'.
It's okay to negotiate, but f they want something from you, what can you ask for in return from them?
They want lower prices, you ask for faster payment, or higher volumes, or slower delivery, or less packaging,... Think about what you would value, but that they may be able to tolerate.
Or reverse the negotiation. You want lower prices? I can't do that, but I can offer: more aftercare, faster delivery, named day delivery, customisation on orders above a critical volume,...
There is not always a deal to be done. Know your bottom line; the precise point at which doing the deal will be worse for your business than not doing it. If they won't do the deal above your bottomline, that's the time to walk away. But don't necessarily fire the customer. They may simply be protecting their bottom line on this deal. You may have another deal in the future where you can both turn a profit.
Parenthetically: The customers to fire are those who habitually cost more time in maintenance and stress than they deliver in profit.
I concur with James Bishop and George Matyjewicz. I would also add that during procurement negotiations, sometimes you can change the dynamic of the negotiation by working with the buyer to understand their needs more deeply and changing the specification of their order, bundling items together, changing the delivery timetable, and changing the payment method. Sometimes its not the "price" per se that drives the decision but a combination of elements. I have seen many times where a payment scheme or a delivery timetable adjustment are much more important to the buyer than just the price. You need to consider the whole purchase experience and work with your buyers to identify ways to add value without lowering your margins.
It's their job to get the best price from you that they can. Of course you need to try to set yourself up as a premium product, not a commodity (and it would be wise to know whether that is true or not). You can certainly discuss with them the value that they will get by buying your solution. But, even assuming that your product is different, there's no inherent connection between value, price and cost, so many customers will continue to negotiate as long as they can. That's their job. Before replying to them, or even engaging with them at all, you need to know your walk-away price and stick to it. Some will come back to you once it's clear you're done negotiating. Others think they can get a better deal elsewhere; if they can, then you'll have to be satisfied with the smaller portion of the market that does value your product more, or else you'll have to rethink your value proposition or your pricing.
What a great question.
I handle many international clients, In many cultures bargaining is standard practice. Sometimes they will bargain until you are prepared to leave the table. To them, you have just reach the true price. Their thinking is you will never go under your cost, so when you reach the walkaway point, you have reached your lowest acceptable margin.
Also sometimes they will "try you" just to see how you react.
There are a number of things you can do. in short form.
1. Stand firm on your price. if they say it's expensive agree with them. they will not spend time with you if they are not interested.
2. Never give anything away for nothing. if they want a reduction, ask how many units will the order.
3. If they ask "is this your best price" say yes, I don't want to waste your time in negotiating, however if you would rather negotiate, I can always start with a higher price.
4. If they push harder still, say that you can't do anything on the price, the margins are already too low, normally we would be looking at at a price of $$$$$. We have to make some margin or we go under.
5. If they state that they will walk away, and if you have some margin, wait until they start to pack up or move, then say please wait a moment.
Play with your calculator, or step out of the room. Come back saying that they drive a hard bargain, but if they agree / sign today, I can squeeze a further 2 - 5 %, but it has to be today. You can also say that you don't know how you are going to explain this, but your order will help to smooth thing over.
This way you are saving face, they get something and you get something.
so you create a win/win position.
Lilly you are welcome to contact me if you want any further specific advice.
Look at the value your offering provides, is there a benefit you offer that is unique from your competition? Use this to leverage your value, if the buyer states you are too expensive, ask if the price was the same would you purchase? If yes, then explain the unique value you offer and explain this difference is why the price is more. This will only work if you are convinced of the value to the buyer as well.
I don't know business are you in land what are your products. Keeping your margin low is wrong.
Negotiation is normal, but it has a limit. Also you need to look at your cost and if possiable do some cost reduction to increase your bottom line or to use is as discount for clients. Again if you buy and sell, you must negotiate your purchases for best price as well, because always there are room to negotiate the price in some extend.
Regarding your question:
A great Market Dominating Position can enable you to focus on a specific niche market and communicate that you’re the only logical choice for them to do business with and get over with price shoppers.?
- First, consider the real pitfalls when competing on price
- Low price shoppers overall will take up the bulk of your time.
- They will bleed you dry if you let them
- they will attempt to suck the life right out of your business
- 80% of customers provide 20% of your income
- They’re complainers
- They want more value and scream when they don’t perceive they’re receiving it
- Tend to be poor payers
- Negative word of mouth
- No loyalty ?
When you increase the price you charge for your product or service, you will automatically repel your costly price shopping prospects.
?You will begin to attract those prospects who want more than just a low price... they want the best value
That’s why it’s so important you continuously add value to what you sell by understanding exactly what your target prospects want and then giving it to them in the form of additional products and services.
Use these 2 strategies:
1- First, consider the psychological barrier of price.
2- Across a Product/Service Strategy. That means you increase your pricing on all your products or services by a specific percentage... say 7% , but before you take action, research your competition.
Hope that helps.
If you need more info contact me please.
It's a truism that some cultures view signing the contract as the **start** of the negotiation process. The obvious answer is to sell the value of your product/service and not negotiate on price. Some customers view negotiation as sport, and that's fine, but others are just price shoppers.
The problem is that those price shoppers will never be satisfied. If you cut your price, they are likely to complain about something and ask for a rebate maybe with the threat of a bad review. And so on. I agree with the advice to fire those customers -- if you can. They're MTTTW -- More Trouble Than They're Worth.
There is lots of advice you can heed but as a younger person there are some basics you should know. First is that there is a difference between selling and negotiating. In the art of selling you learn how to combat price debates by asking the right questions and turning around requests for bargains to understand your prospect's priorities and motivation. Negotiating is what you do when something is sold and all that is left is the final price. That can be done in many ways by trading something you give for something you get. That might be volume, it might be timing, it might be a lead to another potential customer. Most important I would suggest you get in front of a good basic selling book, learn the art of the question and you will see these challenges in a new way. Good selling!
I would make certain I fully understand the customer's needs and what they are looking for in terms of out outcomes. This usually involves asking enough good questions to get the full picture. Then I would offer them different bundles of services, with at least one that partially meets key needs, giving them a start in achieving what they want to accomplish, in the pricing area the customer is seeking, and other bundles that cost more, but more fully meet their needs. This way the customer can see what can be done to make some real progress, within their price range, and what could be done if they invest more in the project. That way you're giving the customer options, choices, without losing your ability to profit.