“The reason it seems that price is all your customers care about is that you haven't given them anything else to care about.” — Seth Godin

If you work in sales long enough you soon realize that money objections are not actually about money after all. And, if you play it right, price becomes an arbitrary starting point designed to stimulate a discussion about value. Likewise, an effective pricing negotiation strategy can impact long-​term aspects like customer loyalty, brand positioning, churn rate and more.

Your Pricing Negotiation Strategy Evolves with Your Business Goals

Choosing the right pricing model is a critical decision for any company’s management. And there are several pricing tactics to choose from based on market position, competition and perceived value of your product. If you know your prospect’s objectives, you can usually come up with ideas to build value without lowering price.

Aimondo, a pricing advisor to retail clients published a guide of pricing models and strategies for 2024. Their insight helps identify and classify common pricing negotiation strategies. They recommend when pricing your product, you should review your client’s objectives, your own business goals and choose from the following:

• Cost-​based pricing is a calculation of your total production costs plus a markup to cover overhead and profit. Used primarily for smaller businesses, this model provides a fundamental view of profit and loss.
• Value-​based pricing focuses on the perceived value of your product in the eyes of your customer. The price is based on what the customer is willing to pay for your product. This pricing negotiation strategy is ideal if you are trusted and confident in your client’s appreciation of your brand.
• Competition-​based pricing involves setting a price based on similar products in your market. This pricing model requires exhaustive price monitoring and an objective comparison of your brand’s market value.

Specific to a new product but still interesting are these models:

• Penetration pricing is used when you are new to the market and need to gain market share quickly. This model is risky and requires a substantial investment.
• Price skimming is a rare pricing model that involves setting a higher price for a new product to capitalize on its uniqueness. This takes a huge investment to stay ahead of competitors to remain viable.

Selling Value is Essential

I’m guessing that among the pricing negotiation strategies above, value-​based and competitive-​based are your immediate challenges. This means you are obligated to build value for your product.

Value-​based selling is fundamental for B2B sales professionals, especially in markets where price becomes the overriding factor. If your product appears competitively similar in the customer’s mind, price is the only differentiator. When this happens, the challenge is to successfully communicate the value that goes beyond the customer’s price perception.

Mike Schultz, co-​founder of the RAIN Group offers six strategies to negotiate price from the buyer’s POV. If a strong defense is the best offense, then learn from his insight.

Shifting the focus from price to value:

• The first step is to determine the prospect’s pain-​points or goals.
• The second step is to introduce a bridge statement, which connects your product’s feature to the client’s specific pain, needs or wants. (Great examples in the article.)
• Finally, clearly articulate the value or benefit of the feature. This explanation is what turns a simple feature into a meaningful solution for the client.

In his article, Schultz reveals buyer’s methods that are used against you. His insight may provide positional advantage and ideas of how to respond to their tactics.

Sales professionals who embrace value-​based selling will elevate their careers and achieve better results. The best pricing negotiation strategy puts you in control to convince your prospects of the full value of your offerings.

Photo by Photo by Ann H. on Pexels​.com