Some buyers are conditioned to try certain tactics to lower your price. Maybe they've read about negotiation in books or were trained to use pressuring strategies.
When buyers take this kind of positional and win-lose approach, their goal is generally to gain the most for themselves at the expense of the seller. For example, savvy buyers know that many sellers will be especially vulnerable to manipulation just when a contract is about to be signed. It's tempting at this point for the seller to give the buyer what they want and lower the price instead of digging deeper to uncover if their concerns are valid, or a bluff.
6 Common Price Negotiation Tactics
- Anchoring: The buyer suggests a target price to anchor the bargaining range.
- Whack Back: The buyer pushes back on the first price offered.
- Sticker Shock: The buyer is surprised or taken aback by the price you've offered.
- Cherry Picking: The buyer unbundles a solution in order to gain concessions.
- Pencil Sharpening: The buyer primes the seller into accepting a price drop.
- Going, Going, Gone: The buyer creates a sense of urgency, even threatening to leave entirely.
Buyer says: "We're looking to spend no more than $500,000 for this."
With this tactic, the buyer shares a target price, such as a budget cap, to anchor the bargaining range.
How to respond: Ideally, you should be the first to suggest a price. Don't wait for the buyer to do so. If that doesn't work out, don't accept their number at face value. Ask how they came up with their number, and how it fits with their budget. The goal is to uncover whether it's a real number or a ploy.
2. Whack Back
Buyer says: "Your price is too high," no matter what it is when you tell them for the first time.
This is one of the most common buyer tactics—to ALWAYS push back on the first price offered.
How to respond: Ask why. Listen fully as the buyer explains their objection, and ask permission to completely understand the issue. What they say will dictate your response. For example, if they say, "Well, I've bought it before for X!" You can say, "I think the reason I'm here is that you've had a lot of problems in the past. We're different than X." And so on.
3. Sticker Shock
Buyer says: "It costs how much?!"
The buyer appears to be shocked or stumped by the price you've offered. It could be an orchestrated reaction, rather than genuine surprise.
How to respond: Ignore their flinch and wait for any theatrics to die down. Ask why it seems high to them. Often their reasoning is faulty, and you can open up a conversation based on what you find out.
4. Cherry Picking
Buyer says: "I know I told you our initial order would be 5,000 units with 5 components, but we'll just need 500 units and 2 components at first. I did the division so the price should be..."
In this scenario, the buyer has tried to unbundle a solution to gain concessions, and assumed the unit price will stay the same.
How to respond: Address the issue head on with a statement such as "I'll need to review the pricing based on the new scope and terms." They may make it seem as though these new terms came out of nowhere and nothing can be done, but remember—you don't have to accept changed terms just because the buyer changed them. Engage in a discussion to work out appropriate pricing.
5. Pencil Sharpening
Buyer says: "You're going to have to do better than this. We need to get it for less."
This is a common pushback tactic to "get you ready" to drop your price because it's "expected."
How to respond: Don't ask "Well, where do we need to be?" This is a trap. Focus instead on asking questions such as, "Why?" and "What are you comparing us to?" Hold your ground on differentiating the value you offer. If you probe to create solutions, the buyer will often back down.
6. Going, Going, Gone
Buyer says: "I will give it to a competitor by noon if you don't make this concession."
This tactic uses time pressure to get the seller to lower their price.
How to respond: Don't panic or reflexively drop the price. Stall for time to think. Ask for a few minutes to disengage, saying something like, "I'm in the middle of something else right now. I can take a look soon and call you back." Alternatively, you can ask, "So we'll know one way or another after your meeting?" If the buyer says no, then it could be a bluff. If it's a yes, take time to think and call back with a bargain you want. But be aware that this can be a power play on their part. If you cave, they'll expect it in the future.
Now that you can identify these buyer strategies, prepare for your next negotiation by giving some thought to how you will respond if any arise. It's your job to dig deeper into the real issues, separating the buyer's valid concerns from their bluffs and manipulations.