Bargaining or negotiating a deal is an art. All of us have gone through this process in various stages of life, what matters is we got successful or not?

Why should I bargain?

There are many people who thinks bargaining is a cheap tactic, so they pay what ever the retailer says or an MRP, without uttering a word asking discount. In contrast to this there are many others who bargain as if to get a product for peanuts, who bargains again and again. Now if it’s me I will always ask for a discount in a friendly manner, sometimes I will bargain to get a fair deal (a win-win for both) and there are instances I have bargained like a fool and ended up unsuccessful in making that deal. Bargaining aims to save money from our pockets. If you are purchasing an item of MRP 1000 rupees and if you can bargain to get the same for 900, you save 100 rupees, enough cash for a nice dine out. If you are not bargaining you are going to loose this 100 bucks for nothing.

How to bargain and get a fair deal ?

This is a competitive world and there’s fierce competition out in every sector. Purchasing/Shopping is also an art like bargaining. First thing is knowing where to purchase an item at the most reasonable price. Lets go through an example, I want to buy a Sony Vaio notebook, CR 36. Lets say its MRP is Rs.54,370. Now if you have plenty of cash and dont want a bargain, just buy it and remember this article is not for you. Okay! so I want a discount and first thing is understanding how much reduction you want. This is a difficult task as we would like to get anything for peanuts! If we know what’s the profit margin of the reatiler we can assume a possible figure. Profit margin of the merchant depends on various factors like competition,fast moving or not, wholesaler or retailer,his sales volume etc.

How to know profit margin?

As I said it varies with products. For example: A furniture retailer may be selling his item at 30 to 40 percent margin(becuase of low sales volume, slow moving,high demand and less supply of quality items etc), where as an electronics goods retailer may be selling his products for 10 to 20 percent margin. In any case a basic profit margin is 10 percent. No retailer is going to sell an item for a margin less than 10% unless he is a wholesaler or a supplier who depends on large sales volume and lesser profit margins. An average or a common purchaser is unlikely to purchase from wholesalers. This makes it clear that if you are buying from a retailer you can be sure that he gets a minimum percentage of 10 as profit. Now there are exceptions for branded items, fast moving items etc etc. Lets just take this as a general rule.

Note: You can search over the web to get a good idea of the product, its price ranges, wholesale price, where to get maximum discount, fair deal etc.

Now I am going to buy a Sony Vaio and as per our guess my retailer say shop X makes a profit of 5437 rupees. Now this may not be his actual profit, he may need to deduce operating expenses,transportation costs etc from Rs.5437. Lets not think about that, but we are clear that we cant ask for a reduction more than Rs.5437. No retailer/businees person will ever make deal in loss. He may sometimes sell a deadstock at his cost price but never sell  any thing for loss. Now we got an idea and lets make a fair deal.

Fair deal !

Now we cant ask for a Rs.5437 discount, well we can ask but it may not work out! As a fair deal lets ask for Rs.2370 as a discout and lets pay Rs.52,000 for the product. Chances are that you will make this deal if talked in a nice manner to a reasonable sales manager, applying a little pressure tactics. Rs.2370 is about 4.35% of MRP which means the reatiler still gets around 5%, deducting other expenses. In this way if you have an idea of the market rates you can easily get nice deals.

What if the retailer is not willing?

Here comes the real game! – The Art of Bargaining! We offered him a deal and he’s not willing for that, now what? Like Godfather says “Lets make him an offer that he can’t refuse“. Bargaining will not be that effective and produce desired output unless applied pressure on the reatiler. How to apply this? It depends on the purchaser, his attitude, knowledge of market rates, his communication skills etc.

• First Round: If you are confident of the market rates and profit margin – first thing you can do is to make him aware of that. A good way for doing this is, if you know name of a wholesaler who supplies the same or know the shops which are best in the market offering best deals, say your retailer “I know where to get this for the said price. I can get this from shop Y and Z, but I would like to do business with you since you are near to me and I have heard feedbacks that you offer better customer service. Many of my friends have purchased from your shop before,so if you can accept my offer lets do business now”
• Second Round: If hes still not willing, lets make another offer. “If you can get me this for my price I shall purchase one more item from you, say a bluetooth headset” or something like “If you can get me this deal, I shall refer you another business. One of my friend is awaiting to buy a notebook so you will get 2 customers “
• Third Round: You are likely to close the deal in second round, if not lets try this. Lets reduce that discount price a bit say Rs.500 and add a product as free instead, say a pen drive worth Rs.350. If not for this, 90% we can close the deal for reducing the discount price by Rs.1000 and add a prodct as free worth Rs.700 or 800. Idea behind this is a reatiler always benefits by giving free products rather than cash discounts.
• Fourth Round: Even after three rounds if we failed to make a deal, we need to rethink. If we are confident of the discount price we asked and if we are sure its a fair deal, a win-win, we dont need to step back any further. Lets try saying “Well if that’s the case, I am quiting your shop. I know I can get this deal from shop Y, I have talked with their sales manager. Only reason I came here is because of a referance, no big deal.I think shop Y is lucky, they are gonna get 2 people. I also have plans to buy a home theatre system, which I hope, shop Y will get me a nice  deal.”  Now with this, if he want to sell his product he will make deal else forget him, he is not a reasonable sales manager.

Bargaining power ?

Its something that we achieve by making good realationships with a retailer. Our bargaining power is the least when we are making our first purchase(a single product) from a shop. Bargaining ability increases when we become a repeated customer of the shop. If we are buying 2 or 3 products at a time from a single shop we can apply more pressure on the sales manager, than if we purchase a single item. Similarly we get more negotiating power when we refer more business to the same shop and in addition we get a respect and qaulity service from him. He will prioritize us and offer us his best deals. So to get a good enough negotiating power we need to follow a simple method – for a particlular set of products deal with a single shop/retailer(select one from reference and experience – who offers nice deal – a reasonable shop)  and establish a longterm relationship. Always make win-win offers and get the deal.

Marketing is the key factor that determines the success of a business. When ever you start or plans to expand your business, the most important question that you have to solve is “How to improve marketing”

Cold Calls (the practice of calling an individual/firm/company/organization,introducing yourself and about your company,explaining your services and how it can improve/help the other ones business and @ end of call enquiring “weather he/she is interested in the services”) are one of the conventional type or marketing tactic followed over ages. Its still used by many people who know only little marketing tactics and by new startup’s with no ability to hire a marketing team. When I and my friends started our business, we also were at the same situation. We had no marketing teams, not much money to employ some business consultants. The only option left was “do things yourself and study from your experience and mistakes“. If you are working on this mode or if you are doing things by yourself without much knowledge then you should always be in the “feedback” mode, means you should always take feedback’s from each experience. You should ask questions yourself, Why this client rejected my proposal? What was the reason? Analyse and find out then apply feedback correction (Correct yourself is the whole idea!!).

I think, we have made only few cold calls (some 10 maybe! ) so far and I am very proud to say that none of them worked out! After a few failed attempts we stopped making cold calls (well there’s another reason because we already started getting inbound leads by then). But its a fact that none of the cold calls worked out. Also many of the marketing guys I have talked with shared their experience with cold calls as “hell“.

Why cold calls fail?

There are many reasons for this. I will share some of my experiences and of other guys.

1. A cold call is not at all targeted - When we are making a cold call, we really don’t know weather the other hand is really in need of your services/product. In 90% of cases that party might not be interested in the particular services we are offering. They may just say” Oh I am not interested right now! Please call later”

2. Cold calls are indirectly equal to advertisements – Its a fact that we HATE ads! Cold calls also indirectly effect as ads or forced ads or push ads. We really don’t like calls from our mobile network vendors like Vodafone,Idea,Airtel etc. I know many guys placing “Dont Take” with these ad serving numbers.

3. Inappropriate time of call delivery -  We don’t know the mood of the person we are calling, weather hes busy or he/she is interested to spare their valuable 5 mins for us etc etc. In most cases people will say “Oh I am busy right now, please call later”

4. Already hired similar service/bought a similar product - This is another case. I myself had an experience. With an intention to sell SEO services to one of the top builders in Cochin, I approached one. It was fair deal as he understood what I said and granted me an appointment. I went there on time with proposal, explained all the stuffs pros and cons, advantages of online marketing, cost effectiveness etc. “Okay! Okay! great” he said and continued “but I already gave contract to some company ‘x’ so am really sorry. I called you to know what difference you can offer compared to the other” Hmm! so there are cases like this also. But I was more than happy when he said, “your proposal sounds much better than the other and I will certainly call you if the other guys failed”

5. Pricing dilemma- Its another major problem that many of you might have faced. Suppose we were lucky to close a cold call to sale. Next big thing is pricing or bargaining to the sense. When a business is gained through cold call, i think the “more needy” one is we service provider. Client might have the attitude “Its you who pushed me into this deal, I have no need” So he will start bargaining! sometimes to the xtreme that we can see only in streets. well that too is a nice experience. Highly efficient marketers will still tame such persons and close the deal in fair (fair to the marketer!)

6. Delay in payments- They might make an advance payment and most likely to make the second one too. I dunno/ I am not sure weather they will make the last scheduled payments.

7. Chance of dropping projects in half - A client that is achieved via cold calls are likely to drop the project in half the way. He might simply say ” I have run out of cash” or “I lost interest” etc. He may even ask a refund of advance payment.

8. Difficult to satisfy- They might not have a clear aim or a clear cut idea of the project they are buying. They will always ask for corrections here and there and at the end they will say “I m not satisfied”

9. Lack of marketing skills – Its another major reason I should have pointed out @ start of this article. One should be a “terrific” marketer to close a cold call. He should be sharp and clear with aim and knowledge and at the same time should be polite and cool.

10. Offensive – Most cold calls are really offensive! Chances are high it may create a resentful displeasure.

At the end think yourself, “Do you like cold calls?“ I dont!

What’s your idea? Share it as comments if you like and if you have time to spare.