No-no negotiating


Few things make an accountant more uncomfortable than talking about money. Not the money in our clients’ businesses – we’re fine with that. But we really don’t like talking about our prices. And negotiating on our fees? Just stab us in the forehead with our dull pencil.

I suspect this is true of most service providers. Yet, most of us still find ourselves negotiating on the price of the services we want. Isn’t it odd we find ourselves exhibiting the very behavior we find so uncomfortable with our clients and prospects?

Why do people love negotiating? What is it about “getting a good deal” that makes us feel so…good? And, is it rude to try to negotiate on the price of a service?

Why so much negotiating?

People love getting a bargain. We brag about how much money we save. Think about the last time you made a major purchase and were discussing it with a friend. You probably talked about the features of the thing or service you bought, and more than likely you mentioned how you had wanted that thing or service for quite some time. But I bet you said one of the following things, too:

I got such a great deal on it!

The price was just too good to pass up!

I saved $xxx.xx (or xx%)!

Getting a good deal makes us feel good. There’s a psychological reason for this (intermittent reinforcement) as well as a physiological reason (the release of dopamine.) These two factors keep us constantly on the hunt for a good deal. When we don’t find that deal “in the wild,” we try to negotiate for it.

In an earlier post, I wrote about how a good deal isn’t always a good deal. Our brains don’t naturally understand this, though, and so our love of bargain hunting – or maybe I should say bargain-getting – continues. But always searching for a bargain can be harmful, and our own bank accounts and peace of mind aren’t always the only things harmed.

What’s the harm?

Apart from the possibility of impulse-buying, what is the harm in negotiating for a better price? Shouldn’t we want to get the most for our money? Didn’t the money gurus tell us to negotiate on everything during the Great Recession?

Unfortunately, the extreme negotiating encouraged by the Great Recession has led to a commodity mindset in both consumers and business owners. This mindset is no longer limited to physical goods. Not only do service providers have customers and prospects telling us they can get the same services we offer for a better price elsewhere, many of us are starting to believe it ourselves. Succumbing to a commodity mindset directly affects our bottom line, our workloads, and the value we put on our own work.

When someone tries negotiating with a service provider on price, they are basically saying they don’t value the service provider’s time, expertise, and the work they do. When a service provider allows this negotiating, they are telling the customer or prospect they are right to undervalue those things. And when this happens, it has a direct negative impact on all service providers within that profession.

Halting the haggle

Differentiating yourself from other providers of the same services is an effective way to stop customers and prospects from trying to negotiate on price. There’s a reason boutique coffee shops, such as the one I’m sitting in now, can charge $6 for a cup of coffee. They sell an experience along with the beverage. Service providers can accomplish the same thing by offering niche specialization, outstanding customer service, and added value such as special webinars for their clients. Strive to make your customers brag about getting to work with you!

Take note, though: the experience you offer won’t be right for everyone. In order to break the commodity mindset and serve only those customers who will value your offering, you must accept some prospects will find you unappealing. When they do, they will often attack your price first. This is hard to take, especially when you are dedicated to your customers and the service you provide them. To counter this, I offer the following two suggestions:

Try not to take it too personally. Thank the prospect for their feedback, and move on to find your next ideal customer.

Keep this feeling in mind the next time you are tempted to negotiate with a service provider. A little Golden Rule will go a long way to halt the harm of the haggle.

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