Price Comparisons

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This can be absolute: we can search online to find the lowest price and the negotiation is done. But outside of commodity or mass-market buys, what do you do when someone tells you they were offered a better deal?


Examples include, “The other plumber will do that for $100 less,” or “Your asking price is $230 million more than our investment banker’s asset valuation, so we want a $230 million discount and a $500 million holdback for 18 months.”


Handle this tactic by moving the conversation away from price and toward intangibles. For example, ask, “Who would you rather do business with?” In the case of the plumber, you might say, “I live right up the road and I am easy to get along with. I know the neighborhood.” In the investment banking example, switch to intangibles such as intellectual property: “There is no line item for trademarks unless we purchase them on the balance sheet. These are all known worldwide and home-grown. That is the value of this organization—the brand. Not a simple asset valuation calculation.” Never ask “how much” unless you are well prepared for a price war and know you can win.

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