Why dropping the price to close a sale is a bad idea

Oct. 9, 2012

By Dave Anderson
Anderson Evolution Consulting

When reading some of the posts on the dental community forums, I am amazed how often dentists comment or complain that dental distributors were unwilling to drop their price when they hesitate to buy. These dentists seem to feel that the distributor has the upper hand in the negotiations and is simply unwilling to bend. The lack of “back and forth” on price is looked at as a sign that the distributor does not care about them, the order, or in establishing a mutually beneficial business relationship.

The situation may actually be that the distributor has presented their best price up front but failed to communicate this fact to the dentist! Since most people do not really enjoy negotiating, distributors should adopt a practice of simply offering their best price on their initial proposal, including the services that the dentist says he needs and that the distributor anticipates will be required. Most importantly, to foster a business relationship based on trust, the distributor must communicate that they are quoting their best price and clearly define what services are included.

If the price on the proposal does not meet the dentist’s budget, the distributor should have some flexibility in the total price by reducing services, or offering alternative products or options to meet the budget requirements. This is a much better option than to drop the price on the proposal when there is a price objection and risk losing the trust of the dentist in the process. After all, the object is to win the sale and gain a raving fan, isn’t it?

There can be cultural and experiential differences that can impact your proposal pricing strategy. Some dentists may believe, from their upbringing or from experience, that the only way to get a “good deal” is to bargain for it. They may not enjoy that aspect of the buying experience, but they feel that it just has to be done. These situations can be overcome through a very clear discussion about your business practices and philosophy. The dialog should go something like this:

“Dr. Smith, this order is very important to me and my company, but what is most important is creating a long-term business relationship with you built on trust. It is our practice to present our very best pricing on the proposal, eliminating the need for you to negotiate to get a good deal. Based on our discussions about your needs and challenges, this proposal includes the best product alternatives and the services that are typically needed and desired, including: (review the list of services). If you find that this proposal does not fit your needs or budget in any way, realize that there are alternatives. These might include reconsidering options and alternative products, or reducing some of the services included in this proposal.”

With this strategy, your price will not change on the proposal. You should be prepared to propose several product package alternatives. You might include a proposal option that is over the dentist’s stated budget amount if you feel that it is that best package of products to meet their needs. Providing alternatives gives the dentists a choice of “yeses.” Now they move from deciding if they should buy from you or not, to which proposal they should buy. Proposals with options have a much higher rate of acceptance than simple take-it-or-leave-it (accept or reject) formats.

Buyers tend to migrate up the ladder of proposal alternatives, so you might consider starting with one of the least expensive packages, provided that this option still meets the criteria outlined by the dentist. As long as the dentist understands the differences and advantages that the more expensive options offer, he or she rarely settles for the least expensive option. Again, never present only a single option.

If your pricing strategy has been to initially use a high margin to see if you can get the deal at a high profit, but then negotiate to a lower price when necessary, you risk losing the trust of your clients. You can fall into a habit of using price as the way to close the sale rather than convincing your clients that you have superior services, and your proposal is a great value. At the end of the day, the dentist will buy from you because he or she trusts you. Always keep in mind that the dentist will share his or her buying experience with colleagues. It is critical to your ongoing sales success that the right message is being shared. Use a presentation strategy that builds a trusting business relationship. It is a key to building a great reputation as the salesperson and company to go to for dental equipment and service needs.

Over the past 30 years, Dave Anderson has worked with one of the largest distributors of dental products and services in the U.S. in sales, sales management, marketing, office design service, and business management roles. He has also worked with one of the world’s largest dental equipment manufacturers for a number of years. In these capacities, Dave has worked closely with dentists, and has an understanding and appreciation for the challenges that dentists are faced with when making purchasing decisions. He has also created a website with information and reviews on dental capital equipment and related services called The Dentist’s Voice at www.TheDentistsVoice.com. He can also be reached at [email protected].