As a financial advisor, you're well too aware of how businesses are sensitive to price. Buyers are responsible for getting more value at a lower cost.
Nonetheless, sales negotiation training helps you to know your worth and the value your service brings. Giving discounts can undermine your value and encourage other customers to also demand price cuts. Today, we discuss tactics to come out on top in price negotiations with clients.
Know the Client’s Industry
Has your service or product been customized for a particular niche or industry? Showing industry expertise can give you a leg up in discount negotiations.
Make it clear why your services are specifically suited for this client. Extensive knowledge and specialization in a particular niche make you an invaluable partner. Other service providers will find it difficult to compete with you based on price alone, allowing you to charge a premium.
Qualify Clients Before Negotiations
No matter how outstanding you and your team are, your service or product isn't for everyone. Some may purchase it only to realize down the line that they have some unmet needs.
Before negotiating a discount, find out whether the prospect is a good fit for your firm. Do you meet all their needs? Are their goals aligned with your service? A risk-free route for your prospective clients would be for them to try your services via a free trial or consultancy session.
If a prospect isn't the right fit, respectfully decline any offers. If the prospect is a good fit, enter negotiations to find out why your price point is too high for them.
Sell Services on Value
Once you enter into negotiations, make your price known. Once the price is clear to all parties, make a case for the value that comes at that price.
If the client insists on a price cut, then adjust your services to reflect the new price rather than undervaluing your service or product.
Three scenarios may transpire:
- First, the client might find out the watered down service offers sufficient value they require
- Second, the client may realize paying full price for the complete service offers much more value, fulfilling all their business needs
- Third, you or the prospective client discovers their company was never a good match for your service
Consider the Client’s Bargaining Position
Financial advisors need to defend their pricing and reject almost all price negotiations. However, there are a few exceptions to this rule.
For instance, can a discounted price offer be considered part of your Corporate Social Responsibility (CSR)? Offering discounts to non-profits or veteran-owned businesses can provide strategic benefits to your firm. Other factors to consider is whether the particular client is purchasing your services at scale.
Let's say you have to train the company's in-house accounting staff and you get paid per head. It would make sense to offer discounts for a firm with 200 trainees as opposed to a firm with two or three trainees. Another example is if your product comes in form of accounting software installations and license fees. You could offer discounts if the firm is purchasing a high volume of software or a higher-priced enterprise edition rather than if they’re only purchasing one installation for a standalone device.
Suggest Alternatives
Your financial services will not fit the needs of all your prospects, and that's fine. When you have to say “no” to a sales negotiation or discount request, find a way to still be valuable to the prospect.
The best way to do this is by providing affordable alternatives that fit their needs. Directing the prospect to another financial advisor may seem counterintuitive, but it makes you stand out as an honest and valuable service provider. When the prospect feels ready to pay your price, they will likely come back because they appreciate your integrity.
Negotiating Without Undervaluing
Offering a discount is generally a poor business practice for accountants and financial advisors. This is especially true if you’re offering services to a very specialized niche in a small market. Once other customers and prospects learn that you offered a discount, others will expect the same treatment.
Armed with these negotiation tips, start by making sure you’ve tailored your pricing to your target market. For clients who request discounts, sell them on the value of your products rather than your price. If you really have to, then make adjustments to the services you are offering. You can create a “lite” version to reflect the price point your customer is willing to pay.
If all fails, redirect the prospects to competitors who operate at a lower price point. This will gain you respect in the industry, and the customer may recommend others who are able to pay your full price.