In enterprise software sales, the negotiation is often won or lost long before the price is revealed.
Every sales negotiation has a "moment of truth" when both sides are waiting for the other side to flinch. Generally, this moment comes when pricing is discussed and each side is waiting for the other side to blink. After all, it is often said that in enterprise software sales negotiations, whoever blinks first loses.
This pricing conflict begins on the first call, when the prospect asks for the price. While it is tempting to try to accommodate the prospect and, at a minimum, provide a price range, the real reason when the price was asked was to disqualify us. Most often, the customer already has a preferred vendor in mind and is trying to validate their vendor choice.
Moreover, when a prospect asks for pricing upfront, they are effectively inviting the vendor to blink first. By revealing price before establishing value, the vendor surrenders negotiating leverage and allows the prospect to evaluate cost without understanding the economic benefit. Prematurely divulging the price also allows the customer to commoditize the process.
A sophisticated vendor refuses to blink. Instead, they shift the conversation from what the software costs to what the problem costs the customer in the form of inaction. By quantifying the financial impact of solving that problem based on our unique capabilities and establishing an associated compelling ROI (business case), the vendor fundamentally changes the negotiating dynamic from price-based to value-based.
The objective is simple: establish the value of the solution before revealing its price. When the economic benefit is sufficiently compelling, the prospect is no longer negotiating against an arbitrary price; they are negotiating against the cost of leaving the problem unsolved.
At that moment, the prospect blinks first and we win. If your sales team struggles with maintaining a value-based selling effort and falls victim to commoditization, please log into COMPASS at www.moicpartners.com and win each moment of truth.
