Guide on How To Set Price In Business Negotiations
The price of your goods and services are very important to your survival as a business entity. Imagine setting your price below your cost price for product-based businesses. That will be terrible and will have terrible consequences for your business. If this is the case, wouldn’t you be concerned on how to set price in business negotiations? My bet is that you would.
I want to put it succinctly that the knowledge of how to negotiate a price with the customers, how to negotiate with the supplier, negotiating price increases and business negotiation strategies will make you a better entrepreneur. I can bet my last kobo on that.
Related: How to attract and build better customers in business
As an entrepreneur, you will come across certain situations where you must negotiate your way out. It could be as the buyer or the seller. Either way, you should be prepared to set price in business negotiations.
The truth is that if you don’t set it for the transaction, it will be set for you. You just cannot run away from it. Personally, I would like to be in control of the price than to let someone else control it for me.
We have come up with a guide on how to set price in business negotiations and we hope it will be useful to you in your entrepreneurial journey.
Tips On How To Set Price In Business Negotiations
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You have got a reservation price, don’t go below it
You have probably not heard of the concept of reservation price. Not to worry. It is just that price that the seller becomes indifferent about doing the business. That price should be the lowest you can sell.
Your first rule, if you want to set price in business negotiations, should be to determine the reservation price and make sure you don’t go below it.
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Place more emphasis on value
One of your price negotiation skills is to learn how to focus more on the value the product or service has and not on how much it actually cost. When the customers understand the value, they will be more open to the price it will take to acquire it.
Don’t just make it about the price or you will lose out to the low bid. What differentiates your offer from what others have to give is what will set you apart. It is a serious supplier negotiation strategy.
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You don’t have to negotiate with yourself
Normally when a customer comes to you, you will need to propose a price. It is normal for them to ask you if that is the best you can offer. You are advised not to respond with another price. It is best you ask them what they would like to pay.
You are only negotiating with yourself when you are the only one bringing up any price. In negotiation tactics, it doesn’t make the cut.
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Learn how to justify the price
People are more comfortable when you justify the price you have given to your product or a particular service. The justification is kind of more important than the actual price. You may eventually need to reduce the price.
The reality is that people seem to be more comfortable with a price when there is a reason or rationale.
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You can reduce price when you can recoup it from other areas
There is this possibility that customers make their decision to buy a product based on their buying price without paying attention to other related costs. You can capitalize on that when you set price in business negotiations.
You can set a lower price during your negotiations when you have outlets through which you can recoup the money.
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Discount the next purchase
This is a savvy way of ensuring that you are in control of the price and in control of the customers. It is possible to do that.
All that is required of you is to offer a discount on the next purchase. You can fix a high price and give 10-15 percent discount on next purchase. That way, you will be able to cancel out deficits.
