Asking for a Price that Customers Can't Refuse

Wednesday, February 25, 2015

Negotiating on a price can be rather tricky. Price-sensitive shoppers prefer lower price tags. Sellers, on the other hand, generally prefer higher prices on a given sale. Are there any ways that a seller can strengthen his ability to command higher prices?

Yes.

As is often the case, it comes down to the signaling of pricing power. The higher a seller's perceived pricing power, the higher a price he can command in the marketplace. One way to increase pricing power: do not ask for a sale, make an offer instead.

At first, this bit of advice appears to be a matter of semantics, but it's not. What does one ask for? Permission. When a vendor is asking a customer if he'd like to buy, he's immediately operating from a position of weakness. When a seller asks if a price is acceptable, he hands the initiative of the transaction to the buyer. It's clear from such positioning that the asker is making a request for his own benefit. He is relying on the benevolence of the potential buyer.

Now look at the case of an offer.

The Godfather
Image courtesy of Wikipedia

You might recognize the phrase "make him an offer he can't refuse" from The Godfather, a book (and movie) about the leader of a criminal organization. Note that the phrase is not "Ask them in a way that they can't refuse" such a question would strongly imply weakness.

The act of offering rather than asking demonstrates two main points:

  1. The offer will benefit the receiving party. The proposal is not a request for charity, so much as an opportunity for mutual gain.
  2. The party making the offer is both willing and able to walk away. Whereas asking implies that a deal is needed by the asker, offering implies that a deal is available for the taking.

Few buyers will intentionally leave money on the table. It's your responsibility to ensure that not only is the money visible, but the metaphorical table is as well.

With that knowledge in hand, remember to offer (not ask) when reaching for a sale. Also, note that I'm offering both my book on software pricing as well as my consulting services on an going basis.