Potential Sources of Negotiable Variables

Looking more specifically at some of these sources of tradeables will help us to focus our aim and be more precise. These tradeables are not just good in the sense that they help us to achieve the agreement both parties are seeking, but in the process they are doubly helpful, in that they also produce long-term deals that stick. If both parties are motivated by the agreement then we are doubly successful.

Payment

There is so much scope for negotiation on terms - particularly in the United Kingdom, where there is considerable government lobbying on this very issue. Even our old friend the tax office is open to some honest negotiation when it comes to repaying overdue tax.

In 15 years of running this particular business I have never had one bad debt. How is that? Very simply, I always ask for a cheque on the day, with every new client, and a cheque on the last day of the month for every long-term client. Very few have ever queried paying on the day. It has the advantage of being related close in time to the services rendered. In other words, in my field - seminars - people are usually highly motivated at the end of the seminar and it is not painful for them to part with the money. One month or two months later a lot of that feelgood factor will have been dissipated by the normal daily grind.

Why not say, 'If you can give us a cheque on the day rather than your 60-day terms, we can provide a further half-day of helpline time.' Consultants, and professionals like accountants, why not negotiate your payment on direct debit: say, 'If we can agree monthly direct debits starting this month then we can reduce the annual fee by £800.'

Buyers use payment terms creatively. Very few sellers do. You can actually motivate them to trade concessions by the simplest of adjustments to payment.

Caution 

Do not ever accept normal practice as binding. As long as it is ethical, there is no reason whatever for you to be bound by years of so-called normal - in reality, damaging - practice.

Quantity

Think through the implications of volume on your buying or selling. If it is a product, perhaps you say, 'I can lower the price from X if you take Y.' If you are a consultant, say, 'We can provide the research for £1,000 per annum each office, rather than £1,200 if you include your regional offices.'

If you are the buyer, think creatively about how you can use volume to your advantage. You might say, 'How important is volume to you; at what point does increased volume impact your production - positively or negatively?' This can apply to the purchase of fixed-price items that have become virtual commodities.

I was buying a new PC for my office. I knew from previous experience that asking for a discount did not work, but I talked about volume and discovered that if you bought 12 you could get one free. It then became an option for me to act as a coordinator for some of my friends and acquaintances in buying bulk.

Time

There are all kinds of factors that can be considered. Think of the timing of delivery, further shipments, progress reports, closing dates, deadlines. Think through the time-related elements of your own sale or purchase and use those elements to advantage.

A number of my clients run subscription-based services, where the contract is an annual membership fee. It is quite costly to renew these customers each year and there are some genuine savings if a customer will agree to a two- or three-year contract. It makes sense to offer something for those extended agreements when necessary.

Another variation is offered by the Marketing Guild, which has a nominal annual membership fee payable by direct debit on a 'till forbid' basis. If you will sign up on a standing order at one of the public events, they will refund the entire cost of that day's event.

A useful way to probe for a concession is to say, 'We will accept your figure if you make it a three-year contract instead.' Or, 'We will agree your figure if you agree to a six-monthly implementation review.'

When you are in buying mode, think through some variables that you could beneficially use. If you know you need the product or service for three or more years, why not suggest, 'We could pay you what you are asking but not quite yet. What we could do is pay 90 per cent of your asking price this year, 95 per cent next year and your current quoted price in year three. If that was acceptable, we could sign a three-year contract subject to conditions.'

More or Less?

An obvious way to trade is to add or remove items from the agreement. It may work for you to have more, it may work for them to have less.

The art is to think these through before the negotiation starts so that you are crystal clear about the cost or profit implications. For example, 'If you will agree to a quarterly review, we can reduce the audit fee by 10 per cent. If you let us supply all your TVs both for sale and rental, we will add digital to each unit.'

Creative buying instincts can quickly find a use for these tradeables. 'If you can agree this price adjustment on our corporate brochure, we will commit ourselves to take 500 A4 flyers at your list price.' This works even better if you know from the beginning that the 500 flyers have to be bought from somewhere. Doing your homework here will pay dividends.

There are all kinds of options open to us if we will think creatively about the specification of our requirement or our product/service. One way to test is to say, 'If we can eliminate this area, then we can accept your proposal of £10,000. If we can reduce the desk research, then we can adjust the price.'

You say, 'You can have the manuals, if we can have two months to write your plan rather than three weeks.' If they say, 'No, we certainly can't do that', you have discovered that time is a key issue. That information then tells you what is highly valuable to them and often what is low cost to you. You can then trade more intelligently.

A Strategy for Referrals

In our training we encourage clients to adopt a simple strategy for referrals by asking their customers for referrals routinely, every three months. A marvellous technique is to build it in as a negotiable. This should be high on our list of favourites because it costs nothing and yet has a very high real and perceived value. If you are selling, why not use it like this: 'I'll agree to the price you want, if you arrange a presentation with...' Could be another branch, another division or a colleague in another company with a similar usage or requirement. Or 'We will agree to this very special pricing structure, if you will invite 10 other potential users to your factory, and act as a positive reference site. We will also feel free to bring prospective clients of our own to the site at mutually agreed frequencies and at arranged times.'

One of my friends developed a marvellous sales tracking software, with macros for sales letters, recalls and networked fax applications. His company negotiated to develop it for a local company at cost. They did this simply because they wanted a multi-user reference site that had networked fax application. They ultimately invited a number of prospects to the site, including an international distributor. The distributor was so impressed that they incorporated the software into their suite of programs and their national distribution programme.

Just two weeks ago an international software company asked me to run an in-house programme. They specifically wanted me rather than someone else from our team of presenters. I used this approach: 'I will present this first programme along with one of my senior associates if you will be willing to refer her to other departments and teams within the organisation, providing of course you are totally happy with the outcome of the day.'