June 27, 2024
In February of this year, I spoke to an audience of Tier 1 suppliers at the NADCA Executive Conference in Scottsdale, Arizona, on negotiation strategies for handling objections and different buyer types amongst the OEM manufacturers.
Pricing is a critical aspect of any business, and it’s easy to fall into the trap of thinking that it’s just a numbers play. However, the truth is that pricing is much more than that. It’s about understanding your customers’ needs and desires and applying a mix of pricing strategies that signals the value you provide and competitive positioning. How we execute pricing effectively hinges on knowing the different customer buyer types. It depends on the sales team’s ability to identify objections and effectively respond to the buyer’s playbook.
Agenda
- Cost+ pricing delusion
- Identifying Buyer Types and Tactics
- Handling the 4 Types of Objections
- Design the negotiation playbook
View Full Presentation
Updates
If you want to have a sustainable business, you must consider pricing iteratively. Contracts are not value exchanges until an order or transaction is executed. This is important because compliance with terms (e.g., volume orders), provisions for triggers (internal and external), and Cost-to-Serve will drive profitability and relationship sustainability.
Many COVID-era contracts are today unprofitable and many transactions have negative pocket margins. As evidence, recently in the news, some suppliers to Stellantis have highlighted the unsustainable relationship and cost+ delusion built into negotiated unit prices based on EV car volumes.
It’s time to consider pricing as more than a numbers game. It’s time to think about it as a trade-off negotiation and a way to build lasting relationships with your customers.
Have a negotiation playbook and Customer Benefit Analysis to ensure relationship sustainability. Procurement wants to make you feel defensive, so you will almost always lower your price. Remember, it’s a game 😅!
Six Steps to Adjust Pricing
Pricing adjustment involves six steps, as outlined in Software Profit Streams™: A Guide to Designing a Sustainable Business. This process can (and should be) performed at any point in the solution lifecycle. In fact, integrating pricing throughout the solution lifecycle is Solution Profitability Management. Need help? Learn more about understanding triggers and developing a current state snapshot of your pricing (and packaging), or schedule a meeting with me.
