Latest / Closing the Deal with Fexingo: Sales, Negotiation, and Revenue Conversations for Operators / Why Salespeople Should Ask for More Before Giving a Discount
Transcript
- Lucas: So I was talking to a friend at a mid-market SaaS company last week. Their average deal size is about eighty thousand dollars annually. And he told me about a negotiation where the prospect came back and said, 'We love the product, but we need a 15 percent discount to get internal approval.' Luna: Classic procurement move. Lucas: Right. And my friend's initial instinct was to just give it. They wanted the logo, they were worried about competition. But instead, he tried something else. He said, 'I can do that, but if I drop the price by 15 percent, I need you to increase the contract term from one year to three years, and add two more user seats.' Luna: So he asked for more before giving a discount. Lucas: Exactly. He increased the total contract value by about 30 percent while still giving the 15 percent discount on the unit price. The prospect accepted. They felt like they won on price, and he grew the deal. Luna: That is the exact opposite of what most salespeople do. Usually they just give the discount and hope for goodwill. Lucas: And that's exactly the problem. When you give a concession without asking for anything in return, you're teaching the prospect that discounts are easy. And you're leaving money on the table. Luna: There's actually a term for this in negotiation theory: unilateral concessions. They signal weakness. Lucas: Yeah. Robert Cialdini's work on reciprocity is key here. Humans feel a deep need to return favors. If you give a discount without asking for anything back, the prospect might feel vaguely grateful, but they don't owe you anything. But if you say 'I'll do X if you do Y,' now there's a reciprocal obligation. They have to give something to get something. Luna: And that 'something' doesn't have to be money. It could be a longer contract, a testimonial, a referral, faster payment terms, access to a decision-maker you haven't met. Lucas: Right. In my friend's case, he asked for a longer term and more seats. Both of those are high-value for his company. The longer term reduces churn risk, the extra seats expand the footprint inside the account. Luna: What about when the prospect just says no to the trade-off? Then you're stuck. Lucas: That's the fear. But here's the thing: if you've already built value, the prospect usually wants to find a way to say yes. And if they're not willing to give anything, then the discount probably wasn't justified in the first place. You want to test whether it's a real need or just a negotiation tactic. Luna: So it's a filter. It separates serious buyers from tire-kickers. Lucas: Exactly. And it protects your margins. Let's say your standard discount is 10 percent. If you always give it without asking for anything, you're training your prospects to always ask. But if you have a menu of trade-offs, you can almost always get something back. Luna: What does that menu look like practically? Give me some examples. Lucas: Sure. The classic ones are: longer contract term, larger commitment volume, upfront payment instead of monthly, a case study or referral, introduction to another decision-maker at a sister company, or even just a faster close date. The key is to have these ready before the negotiation starts. Luna: I've also seen salespeople ask for the prospect to provide a video testimonial. That has marketing value but zero cost to the salesperson's margin. Lucas: Exactly. And the prospect often values the discount more than the testimonial costs them. So it's a win-win. Luna: One thing I wonder about though: does this approach work with procurement professionals? They're trained to spot these tactics. Lucas: It actually works better with procurement in some ways. Because procurement respects structure. They understand trade-offs. If you come in and say 'I'll give you 15 percent off if you double the contract term,' that's a clear, transparent exchange. They can take that to their stakeholders and say 'Look, I got a discount, but we committed to a longer term.' Everyone wins. Luna: Whereas if you just give a discount, procurement might actually think you were padding your price. Lucas: Right. And that's the paradox. Unilateral concessions can actually reduce trust. The buyer thinks 'If they could drop 15 percent that easily, they were probably overcharging me.' So you've lost credibility. Luna: I remember a case from a few years ago where a software company had a 20 percent discount as standard. They gave it to every prospect who asked. Eventually, their average selling price dropped by 18 percent, and their sales cycle got longer because prospects started waiting for the discount. Lucas: Yeah, that's a classic self-inflicted wound. And it's hard to reverse because once you've trained the market, resetting expectations is brutal. Luna: So the smarter play is to build the trade-off into your pricing from the start. Have a list of 'if-then' options ready. Lucas: And that's really what this episode is about. If you're a salesperson, the next time someone asks for a discount, pause. Don't say yes. Don't say no. Say 'I can probably make that work, but I'll need something in return. Let me see what I can do.' Then present an option. Luna: And if they push back, you can always walk away. Which is better than giving away margin and regretting it later. Lucas: By the way, speaking of conversations that help you think differently about sales — if these episodes have ever helped you in a negotiation or a deal, you can support the show at buy me a coffee dot com slash fexingo. It's a small way to keep this podcast ad-free and focused on real tactics. Luna: Yeah, and we really appreciate it. It makes a difference. Lucas: So back to the trade-off idea. One thing I see salespeople struggle with is the actual phrasing. They worry it sounds manipulative. Luna: How do you phrase it without sounding like you're playing games? Lucas: I like the phrase 'I can do that, but I'll need something in return.' It's honest. You're not hiding anything. You're just saying 'this is a two-way street.' Another one is 'If I can make that work on price, would you be open to extending the contract term?' That's a conditional question. Luna: So you're asking permission to ask for something. That's actually quite disarming. Lucas: Exactly. And it gives the prospect a sense of control. They can say yes or no to the condition. But if they say yes, you've already won the negotiation. Luna: I also like the approach of anchoring high before the discount. So if you know you're going to give a 10 percent discount, start the proposal 10 percent higher than your target. Then when you 'give' the discount, you end up where you wanted to be. Lucas: That's a classic anchoring technique. But you have to be careful. If your prospect knows the market, they might see through it. I think the trade-off approach is more robust because it's based on real value, not just price positioning. Luna: So what's the one thing you want listeners to take away from this episode? Lucas: Never give a concession without asking for something in return. Even if it's small. Even if it's just a faster close. Because the moment you give without getting, you've set a precedent that discounts are free. And that's how margins erode over time. Luna: And if they push back, you have a decision to make. But at least you're making it consciously, not out of fear. Lucas: Right. The worst negotiator is the one who gives away value without even realizing it. So next time you're in a deal, have your trade-offs ready. It could be the difference between a good quarter and a great one.