Negotiating Large Non-Retail Sales: Part 1
PARAMETERS FOR PROFITS
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Brian Jud, the executive director of SPAN and the author of How to Make Real Money Selling Books, offers commission-based sales of books to buyers in special markets. For more information: premiumbookcompany.com.
When you are in the middle of negotiating a sale for a large quantity of books, and your prospect offers to write you a check for a huge sum of money, should you take it and get the order? Not unless you know whether that amount will make the sale profitable for you. If you do not, or if it will not, resist the temptation. Even an enormous payment can lead to your losing money.
A negotiated sale must be good for both sides if it is to set the stage for a long-term relationship with recurring revenue. Two things you can do before you enter a negotiation will prepare you to come away with a mutually profitable deal. What follows focuses on the first: Know your parameters for a profitable order. The second, to be covered next month, is: Have alternatives available. Both will help relieve pressure on you to accept a potentially unprofitable transaction.
Data for Better Discussions
Determine your costs. Figure out the boundaries of an optimum order for you in advance of any negotiations. That way, you will know your Best Negotiated Outcome (BNO) and what you can sacrifice while still making a profit.
Before you meet with your prospect, consult your printer to learn your book’s printing costs at a variety of quantities. Also learn the cost of customizing your books if you have to add the customer’s logo to the cover and/or insert a page with its message. Find out how much time is needed to print and ship the various quantities on which you asked the printer to quote; although the buyer typically pays the shipping charges, you should be able to provide estimates for specified print runs.
This preparation will serve you well in two common circumstances. Your prospect might say, “What is my price and delivery date for 10,000 books printed with our logo on the cover?” You could then answer quickly and correctly, and close the sale on the spot. Or your prospect might say, “If you can deliver 10,000 customized books in four weeks for $3 each, I’ll give you a check now.” You would know immediately whether you could make a profit by selling on those terms, so you could either accept them or make a counteroffer.
Identify options. Price and delivery are two areas in which you may find yourself at odds with your prospect. When conflict arises, do not become argumentative, but do not let your prospect take advantage of you either. Take the focus off price and delivery and place it on issues such as those outlined below to find and agree on the package of product, terms, and service that increases value for your prospect without sacrificing your needs.
Consider alternatives for each issue that might arise. The more options you have, the more likely you are to avoid “take it or leave it” situations and close the deal satisfactorily.
Here are the steps for understanding your most acceptable BNO.
1. Make a list of all the options that would be advantageous for you. Consider, for example:
- short discount
- no returns
- minimal customization
- long delivery time
- large-quantity order
- opportunities for recurring revenue
- payment with order
2. Figure out which advantages you would prefer to give up to make a deal. If you must concede one point to close the sale, which would it be? For example, you might agree to add a logo to the cover if it is critical for your prospect but a minimal factor for you, because you know it entails little marginal cost.
3. Figure out what you are not willing to sacrifice in return for a favorable outcome. For instance, you might have to insist on no returns because you do not have the financial resources to print a large quantity of books if copies may be returned to you for credit. If you do need to insist on no returns, you might offer a bigger discount or extended payment terms in exchange.
4. Understand what could undercut your BNO. Unanticipated possibilities may surface during negotiations. One participant may get a brainstorm and say, “What if we . . . ?” Then the conversation will revolve around that unforeseen topic. Although it is impossible to anticipate all diversions in advance, you can think about whether you could remove or alter specific constraints.
For example, if your prospect suddenly demands that you pay a penalty for late delivery and you know that your printer can easily make the specified date, you can regain momentum for the deal when you reply, “Actually, I’ll pay you a higher penalty for late delivery, if you pay me a bonus for early delivery.”
Similarly, if a buyer requests that you purchase a costly product-liability policy, and you are familiar with the terms of your current policy, you can describe them, letting the buyer see that they are adequate and making it unnecessary to purchase additional coverage.
5. Determine your final BNO. Focus on your bottom-line objective and keep your best interests in mind. The more you know beforehand about the people, the process, your costs, and your operations, the more able you will be to discuss terms on the spot and achieve the best negotiated outcome.
The Selling Non-Retail Series
“For More Profitable Publishing, Compare Two Major Marketing Strategies,” which appeared in our January issue, explains what’s involved in selling books non-returnable to professional buyers in companies, associations, schools, and the armed services who buy large quantities. Additional guidance on negotiating such deals will appear next month in “Negotiating Large Non-Retail Sales: Part 2“.
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