Negotiating and discounting are not the same thing.
When you negotiate, both parties try to find a way to exchange value that gives each side what they need. The key factor here is that both sides are giving something to get something they require.
Your customer may tell you that they need a lower price. You counter by offering to reduce your price in exchange for something that provides you with as much or more value than what you gave in a price concession. That might mean that you ask for a larger order to grant that pricing, payment in full and in advance of delivery, exclusivity in your category, or one of the countless other trades that might make a win-win deal.
Both parties are giving something to the other party. That’s what makes it a negotiation.
Discounting is different. When you discount, your prospective client asks for a lower price, and you make the price concession to acquire the prospect’s business. Your potential client doesn’t give anything additional in return.
Much of the time when people say they need to learn how to negotiate, they mean they need to learn how to defend their pricing model to avoid discounting. They want to know how to justify the delta, the difference between their pricing and their competitor’s pricing.
Discounting may be necessary to win a deal. But negotiating is helpful when it comes to winning at a price that allows you to execute and deliver to your clients.
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Filed under: Negotiation