How you can avoid being taken advantage of in sales negotiations

How you can avoid
being ‘taken
advantage of’ in
sales negotiations

© Copyright One Sherpa Pty Ltd 2010

When you are negotiating with customers,
which is more important?
TERMS or PRICE


How many times
have you
forgotten about
terms when
negotiating a
sale?


Have you been so focused on making a profit that you
simply didn’t consider how and when you might get paid?

Have you been guilty
of thinking you’re
making money, when
all you were focused
on was making profit?


Which do you think is
more important?

TERMS or PRICE


What gets affected
in a sale when you
focus on Terms?

The level of
Accounts
Receivable.


This is where money gets stuck in your business
because your customers are NOT paying you

Terms can be
measured in days but
this will translate into
money that your
customers owe you!


What gets affected in
a sale when you focus
on Price?

The sales value and
therefore the margin
that you will make on
those sales


If you fail to earn the right margin…
you will not get enough money to survive even
when your customers finally pay you!


So which is more important?

or PRICE?
TERMS


The truth is that they’re both important.


It’s not a case of It’s a case of
EITHER / OR BOTH / AND


So where will you find out how you’re going
with this in One Minute Business Checkup?

There are two of
the measures
which will be
affected by the
decisions you
make around
Terms and Price


Let me show you how to check these measures in One
Minute Business Checkup


PROBLEM #5


Let’s take an example where you were negotiating prices
on your largest customer who was purchasing $200,000
of your sales each year

You were looking for a 10% price increase and the
customer agreed to the increase if you would increase
their terms from 30 Days to 60 Days


Let’s first look at the price increase.

CALCULATION OF INCREASE
10% on $200,000 would be an additional $20,000 in
sales


$20,000 more Sales

Increase in Margin
from 20% to 21.9%

Let’s look at how the new terms will affect Accounts
Receivable

CALCULATION OF CURRENT OUTSTANDING
30 Days / 365 Days * $200,000 = $16,438

CALCULATION OF NEW OUTSTANDING
60 Days / 365 Days * $220,000 = $36,164

An Increase in Accounts Receivable of
$36,164 - $16,438 = $19,726

$19,726 more A/c Receivable

Checkout your own information now.


Using the sandbox
you can ‘play with
the numbers’ to
make sure your
sales negotiations
get the best results


Go to www.oneminutebusinesscheckup.com
and make sure you’ve got the best price
negotiation in your business


How you can avoid being taken advantage of in sales negotiations

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