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).
Today it has become nature of individual to bargain for lower price.One thing I would suggest is that keep your prices flexible.And secondly if you are not getting anything then do not make deal.Thirdly if the person is adamant then try to take money in advance.
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.
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!
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.
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.
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 guess by keeping cool and telling what ever is the best possible, just a little idea, sure many people have better idea too..
Ask them if they are there to bargain or do business, be firm and dont let others waste your time, if you hit me up on facebook we can talk about this more.
I constantly faced clients not wanting to pay sales tax at my clothing outlet in a flea market. "Why do you charge tax, nobody else does?" Because I operate like a real business, want to be legal and be here the next time you need these useful garments.
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.
FIRE THEM! But you can only do this when you have created something that they don't believe is a "commodity." Price is the primary issue when the customer can't easily distinguish you from your competitors...you all look the same to them and they are assessing equal value. This is the definition of a commodity. When you are in a commodity market, the only way to win is with such items as price, delivery, terms, etc. None of these are distinguishing nor do they add any long term value.
Go back and do some soul searching on why your customers view you as a commodity. What are you lacking that would set you apart in their minds from your competitors. HINT: it most likely isn't the product or service you provide but is more closely aligned to the "experience" you deliver. The customer experience is the ultimate differentiator.
Now when you have created this level of differentiation based on your experience and the customer wants a lower price, you fire them and go look for those that value your exceptional experience. Don't be afraid to change the mix of customers. But you can't fire them unless you have the right experience in place. But when you do, you get a much better (and more profitable) business. Hope this helps...
I agree with James. Negotiation is the norm in many (maybe most) countries. It's an insult if you don't bargaon.
I assume you are in the U.S. So, if you have problems negotiating price, then do as James suggested. If you are OK negotiating, then DON'T post your prices, start with high prices, and be prepared to bargain.
I was in the Middle East and saw somebody selling something for 50 and the buyer wanted to pay 5. Negotiations back and forth and the end result was 20, not the mid-way point that you would think.
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
Make a purchase progarm for them with backend rebate, the more the purchase volume, for example, per quarter, the more rebate (money award or additional goods ) they will get by the end of quarter.