Always ask for a discount, incentives and sweeteners
I was at a flea market with my sister recently. As I walked around, I was amazed at the price tags. Why should that fancy chair cost so much?
Then, it occurred to me. That's just the starting price. Nobody pays the asking price at the flea market. If you do, you're a chump. At the flea market, you're expected to negotiate the price down.
It's the same way in business. The sticker price is just the start. But start-ups often talk themselves out of negotiating because they think they don't have enough buying power or authority, or they aren't a big company or big-name player in the field. They assume the vendor doesn't need their money, so they aren't going to ask for a lower price because they're too small.
Keep repeating this mantra: You have money, and they want it.
You might not have as much money as somebody else, but you have it, and they want it.
Naturally, you're not going to give the store away when it comes time to acquire products or services. Negotiation is everything because the money you save goes to the bottom line, and that's what your investors want to see.
So, here are ways to save your company money and make your investors happy:
1. Always ask for the discount.
Say, "Is this the bottom line?" Or, "I don't really have that in the budget." No matter how you say it, no matter what you think you can get, always ask.
2. Ask about incentives and deal-sweeteners.
Say, "This seems like a lot of money. What can you add to it?" I've gotten things that should represented a quarter of the contract value for free just by asking for them.
3. Ask for incentives to renew early.
I start all my discussions on renewals at least three months before the expiration date. Many companies offer incentives for early renewals. If you wait until the last minute before your contract expires, they know you're in no position to bargain or go elsewhere.
I negotiated a lower price on one renewal and got extended payment terms. I was able to push out payments for six months and renewed at a lower price. Why? Because I asked what it would take to get the deal done earlier.
Remember: You have money, and they want it. It doesn't matter whether you're a Fortune 20 company or a week-old start-up.
4. Act as if you're about to walk away.
Say, "Nah, this doesn't work for our budget." Start to walk away. It doesn't mean you should go through with it. Flea market sellers want to move product. So do your vendors.
You can always come back, but sometimes the art of walking away opens the door to the next stage, where your vendor says, "Let's try this."