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Evaluating the Merits of Building Negotiating Into Your Prices | Entrepreneur

One way of dealing with customers who expect a discount is to build negotiating room into your price structure. A benefit to handling the issue in this way is that not everyone will attempt to negotiate. Some people will pay the higher asking price, which will increase your profit. Conversely, you may not wish to negotiate with some customers. Perhaps you know that serving some customers is more expensive. In those situations, you can reduce the amount you discount.

There are some downsides to this approach. Some people may be scared off by your higher asking price and not even bother to negotiate. Some customers simply do not like to negotiate. They will make a decision based on the best asking price they find. If you have built too much headroom into your pricing structure, you’ll miss out on this business. Of course, some business owners don’t enjoy negotiating and choose not to do so.

In some industries, this has led to a preemptive strategy called the “no dicker sticker.” In other words, business owners let prospective customers know up front that their asking price is firm and they will not negotiate. CarMax is well known for following this approach in the pre-owned vehicle industry. This avoids all of the disadvantages of negotiating price, but has some drawbacks of its own.

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Evaluating the Merits of Building Negotiating Into Your Prices.

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