Latest / Sales Leadership with Fexingo: Quota Carriers, Sales Managers, and Revenue Teams / How Top Reps Handle Discount Requests from Procurement
Transcript
- Lucas: So you've sent the proposal. The prospect loved the demo. Your champion is on your side. And then procurement sends an email: 'We need a 20 percent discount to move forward.' Suddenly that warm deal goes ice cold. Luna: That moment is terrifying. And most reps just drop the price because they think the whole deal is at risk. But that's usually a mistake. Lucas: Exactly. The thing is, procurement's job is to get the best price. They're measured on savings. So when they ask for a discount, they're not saying your product isn't valuable - they're saying 'give me a reason to approve this.' And you can give them one without destroying your margin. Luna: Let's talk about a real deal I saw recently. A SaaS platform, two point three million dollars annual contract value. Procurement came back asking for fifteen percent off. The rep's first instinct was to just say yes because the deal was at the end of the quarter. Lucas: Right, and that's the trap. If you give away fifteen percent on a two point three million deal, that's three hundred and forty-five thousand dollars of pure margin gone. But the rep here did something smarter. He said, 'I can do ten percent off, but that means removing the dedicated onboarding specialist and reducing support to business hours only.' Luna: Ah, so he introduced a trade-off. He didn't just give a discount; he asked what they were willing to give up. That changes the conversation from price to value. Lucas: Yes. And procurement came back and said they'd accept five percent off with full scope. The rep ended up giving a five percent discount, but he protected his margin and kept the services intact. The key was that he quantified the trade-off. He showed that discounting has a real cost. Luna: So what's the framework? When procurement says 'give me a discount,' what should a rep say? Lucas: First, don't say yes or no immediately. Say something like, 'I understand you need to show savings. Let me walk through what's in this price and where we might have flexibility.' Then you list the components - implementation, training, support, SLAs - and ask which ones they'd consider reducing. Luna: But what if procurement pushes back and says, 'I don't care about those services, I just want a lower price'? Lucas: Then you need to tie the price to the outcome. Ask them: 'If we reduce the price by ten percent, what metric in your business will be impacted? We've priced this to deliver X result. If we cut the price, we have to cut something that delivers that result.' That's when you bring out the ROI model. Luna: Let's talk about the ROI model. A lot of reps build one early in the sales cycle, but then they forget to use it when the discount conversation happens. Lucas: That's a huge missed opportunity. You should have a slide or a one-pager that shows the projected return over three years. Then when procurement asks for a discount, you say, 'At the current price, your three-year ROI is four hundred percent. If I lower the price by fifteen percent, your ROI goes to four hundred twenty percent. That's nice, but it's not a game-changer. The real leverage is in how quickly you get the team up and running, which we've optimized for with our standard implementation.' Luna: So you're reframing the conversation from cost to value and speed. That makes the discount seem less impactful. Lucas: Exactly. And if they still insist on a discount, you can offer non-price concessions. Things like extended payment terms, a longer pilot period for the rest of the organization, or a case study commitment. Procurement often cares about things that don't cost you margin. Luna: I want to go back to something you mentioned earlier - the trade-off technique. Can you give a specific script for that? Lucas: Sure. When they ask for a discount, say: 'To be transparent, our pricing is structured around supporting you at a certain level. If I adjust the price, I would need to adjust the scope. For example, I could reduce the price by ten percent if we go with a standard implementation timeline instead of the accelerated one, and if we switch to email-only support. Would that work for your team?' Luna: That forces them to choose between price and value. And often they realize they'd rather have the full package. Lucas: Right. But let's talk about another scenario: when the executive sponsor gets involved and asks for a discount. That's a different dynamic. Luna: Yeah, because the sponsor is supposed to be on your side. If they're asking for a discount, it usually means they're feeling pressure from their own finance team. Lucas: Absolutely. In that case, you need to reinforce the business case. You say, 'I understand you need to show savings to your CFO. Let me help you build that case. Here are the three biggest value drivers we identified. How many of those can you take credit for? Let's make sure your finance team sees them.' Luna: So you're turning the sponsor into an advocate for the full price. That's smart. Lucas: Exactly. And sometimes the best move is to offer them something internal - like a private ROI report they can share with their CFO - that has nothing to do with lowering the price. It helps them justify the investment. Luna: I've also seen reps handle discount requests by going back to the champion and saying, 'Help me understand why procurement is pushing so hard. Is there a budget issue we missed?' Lucas: That's a great diagnostic. Maybe the procurement person was told to cut costs by ten percent this quarter, and your deal is the biggest target. In that case, you might offer a phased rollout where the first year is slightly smaller, with a committed expansion later. That reduces the upfront cost without a permanent discount. Luna: So the key theme here is: don't just cut price. Always tie a discount to a concession. Lucas: That's it. And if today's conversation was useful to you in navigating these tough negotiations, the way this show stays ad-free and listener-supported is through people like you. If you'd like to keep these episodes coming, you can find us at buy me a coffee dot com slash fexingo. It's a simple way to say the show matters to you, and it helps us keep doing this. Luna: Yeah, I love that. It's just a small gesture that goes a long way. So thanks for considering it. Lucas: Alright, let's get back to another tactic. What about when procurement says, 'We have a policy of not paying list price'? Luna: Ah, that's a classic. They're basically saying 'give me a discount just because.' Lucas: Right. You can respond with, 'I understand you have guidelines. Our guidelines are to price based on the value we deliver. Let me show you the value we've quantified for your team, and then we can see if there's a way to align with your policy.' Then you walk them through the ROI again. Often, they'll concede because the value is clear. Luna: I want to address one more thing: what if the procurement person is just a tough negotiator and they're using pressure tactics? Lucas: Then you need to stay calm and stick to your process. Don't get emotional. You can use silence. When they say, 'That's your best price?' just pause. Let the silence sit. Often they'll fill it with a better offer. Luna: Yeah, silence is powerful. And if they walk away, you have to be willing to walk away too. Lucas: Exactly. The best deals come when both sides feel they got something fair. If you give away margin, you'll resent the client and the client won't value the product. So protect your price, but do it with empathy and data. Luna: To wrap up, the next time procurement asks for a discount, take a breath. Use the trade-off technique. Quantify the value. And if needed, go back to your champion to strengthen the business case. Lucas: That's the playbook. Discount requests are actually diagnostic opportunities. They reveal whether the prospect truly sees the value. So use them to uncover gaps and then close them without cutting price.