Here’s a story you’ve probably heard, if not participated in, many times in your career. A lead is passed your way, regarding the use of your services. You dutifully set an appointment with the potential prospect. Things are going well on the call, and the conversation turns to costs. The prospect doesn’t want to tip his or her hand when asked about the budget for this service. Instead, the prospect deflects the request for information, and asks you to put a proposal together for them to see.
Sound familiar? It sure would be valuable to have an understanding of the budget for the services you are hoping to provide, but we can’t blame the prospect here… yet. These numbers are guarded with the hopes that, by not disclosing a budget, the prospect will get a better deal. After all, what if the budget is higher than the rate the vendor quotes them? So we, the vendor, will often be forced to go first. But without knowing the budget, what happens if our number is so high the prospect backs out without ever entering into a negotiation?
Recently, I was on a call with exactly this kind of a prospect. We did our pricing dance, and I was asked to send a proposal. This was for a job that was twenty minutes from my house, and a great fit for my services. As a man who has spent nearly 32 years on the road conducting seminars, I really wanted this job. What’s more, I really liked the company in question and the prospect I was talking to. So, I did something I rarely do; I damaged my negotiation position before I even sent out the proposal. Here’s what I told the prospect:
“I rarely am able to conduct seminars near my home, let alone in my state. I’m going to put together a proposal as you’ve asked, and I’m going to put my published rates into this proposal. However, because the session is as close to my house as it is, and I’m available to do this job, I want you to know this number is merely a starting point. If I’m not the best person for the job, the rest is moot, but if I am, all I ask is that once you get the proposal, if the numbers don’t fit your budget, counter them. Then it will fall upon me to either do the job for the numbers you are suggesting or not.”
I was basically inviting him to counter the price I had sent him. I even made a quick little joke when I said, “How’s that for an approach to negotiation?!” My prospect seemed grateful. I sent the proposal out 30 minutes later, and the next morning I received a short email back: It read:
“Thank you very much for your proposal. Unfortunately, your price is significantly higher than our budget allowance for a 90-minute session. We can’t afford this to kick-off our meeting.”
And like that, despite my follow-up attempts, another vendor had been selected and the deal was dead.
It’s a strange paradox, because on the one hand, we as vendors are often forced to give up our negotiation position to pacify our prospects. But rather than negotiate, our prospects are rejecting the offers made to them. It’s a shame, because we aren’t talking about hiring an overqualified candidate to work for a company. It’s understandable that the company often feels like they will be stuck with a disgruntled employee who will bolt the moment something that fits his or her qualifications comes along. We’re talking about getting goods or services at a reduced rate. Why in the world would that be rejected based on price without a counter?
The first time it happened, I thought it was an anomaly. The second time it happened, I spoke to other vendors and realized it’s a trend. When a company refuses to disclose its budget, and rejects a proposal without countering based on price alone, it just leaves me scratching my head.
As our economy continues to limp along, today’s BLArticle® is aimed at those companies who are missing the boat on this issue. By all means, when it comes to a negotiation, go second, but if you want the goods or services from a vendor and the price given is higher than what you expected, never, ever reject a proposal based on price without a counter. What’s the worst that can happen to you? That’s right: nothing.