The following article is my reaction to a blog from a friend, Steve Haggett at Iron Mountain. He responded to an article from our Patrick McCullough about some of the pricing abuses in the pharmaceutical industry.
It was a tough conversation but in the end, it was simple and quite insightful. It started with a client pushing back on price. We responded that it was going to cost us a lot to get the job done. She came back saying it was a lot of money to support only a few people, especially when they had more to train. We realized that we could run the engagement with more people in the same session…same cost for us and better outcomes for the client. The client was happy and placed the order.
Here's the question: Is it harder to set prices or control them once they are set? Next, think about where you spend most of your time? Sorry, that was two, but each is equally important. Why? Because if you struggle with one, you’ll be too busy with the other to fix it.
Topics: Setting Price
Last month, I wrote about problems with the phone company that provides service to our home in the woods of Maine. If you don’t remember, the service is terrible and the process to get problems resolved is awful. In any case, we were in Maine recently, and saw a truck for a competitive phone company. I couldn't wait to call them. Though the call was quick and to the point, the customer service representative gave me the options and informed me that it was going to be at least a month before the service became available. When it is available, we will be switching to the new phone provider. Why? Because over time, I have come to absolutely hate dealing with the current telephone provider.
Topics: Negotiating with Backbone
OK, I get it. In rapidly growing markets, it's worth it to discount your products and services, in order to establish and expand your footprint. The high-tech guys have known this for years and use that strategy quite effectively.
Topics: Negotiating with Backbone
Recently, we've seen a number of negotiators get taken to the cleaners in business and politics when they just didn't know how to deal with a bully. You know who they are: they yell and scream at you, pounding the table throughout the process. Think about the current trade negotiations with China—the same thing happens in business all the time.
Big or small, almost all B2B companies have to sell to large, powerful companies because they believe that the "big win" keeps the plant running or resources at capacity. Those negotiations are often tough and focus on price. “Tough” isn't quite the right word – how about brutal? Those big companies, or gorillas, control a lot of revenue, and like it or not, we have to sell to them. As a result of those brutal negotiations, the oftentimes smaller seller will lose money or barely break even.
In an article published recently in the “Technology” section of The Wall Street Journal, the author, Jack Nicas, alluded to pricing excellence in the three giants of U.S. and global technology: Apple, Google, and Amazon. Here are the results of the last quarter:
Over the past year, I have noticed an increase in "scorched earth" negotiating tactics. These are tactics which move beyond "going kamikaze" that I talk about in Negotiating with Backbone. This new tactic indicates that the other party is going to angrily walk away from the deal and hurt each of the parties in doing so. Here's what I have learned: so far in every case, while it is an escalation of normal poker playing, it is still just a tactic to get a discount.