How to negotiate a higher price without losing a deal

What techniques or tactics would you recommend for salespeople selling used automobiles who want to negotiate higher grosses with customers without losing deals? -Community Mailbox

There isn't one easy answer to this question. I believe the answer lies in utilizing the full range of sales skills to create sales momentum and to leverage that momentum into a closed transaction.

The best salespeople achieve higher margins that average or low-performing salespeople. Why? They have better sales skills; their better at creating momentum; they're more likable; They have better communication and closing skills; they do a better job of understanding customer needs & desires; they add value to the relationship; they are top-notch presenters, etc. -Skip Anderson

"How to negotiate a higher price"

It sounds like you start the process by providing a lower price and then trying to bump it up? If so, stop that! Always start from the top and work down. Always show the biggest and best of your product and then, if necessary, move down to lower, inexpensive models.

Remember, a major key is "perceived value" vs. actual value. A 20k car may be expensive, unless it has a perceived value that is much higher. Explain the details of the product (awesome stereo system, excellent fuel mileage, amazingly low mileage, newer year, etc.) and put a value on each. The sum of those individual items may give a very high perceived value. As a result, your sales price will be perceived as a great deal. You have made a great deal ONLY when the customer believes he is getting a great deal. It is all about perception.

Hope this helps.

The Sales Artist -The Sales Artist

I wasn't meaning start low and work high. Have you heard the phrase 'hold a gross' that's what I mean. Buyers know times are hard and think they should be able to negotiate a killer deal. How would you 'hold a gross' when faced with a customer like that? -Community Mailbox

You can't negotiate effectively unless you have an excellent understanding of each customer's buying motives. That means asking them quality questions EARLY in the sales conversation. The more information you have about your customer such as; what is important to them, what other cars they have seen, what other dealers they have visited, what is the most important factor for buying a car, etc., the better you can position yourself.

However, if you want straight negotiating tactics, here are a couple to get you started:

Flinch. That means you visibly and verbally react to a customer's request. For example, a person asks for a 15% discount. Your response is to looked shocked and say, "You want a 15% discount! I can't possibly do that." Then remain silent and wait for them to respond.

Trade-Off. When a person asks for a discount, ask for something in return. "If I could get you that price would you be willing to take the extended warranty?" This increases the size and scope of the sale and shows the customer that you expect something in return for making a concession.

The Vise. This tactic encourages people to make another offer. When a customer makes a request, you smile, look them in the eye and say, "You'll have to do better than that." If they ask, "How much better do I have to do?" say, "Better than that offer."

Ultimately, it always comes back to value. If you have demonstrated the value of buying from you and your dealership, price will become less of an issue. That means asking more questions instead of talking.

Here are a couple of links for articles on this topic:

Hope this helps. -Kelley Robertson

One of the tough aspects of auto sales in particular these days (along with real estate) is that prospective buyers do expect a tremendous deal, given the economy. Unfortunately, sometimes they have unrealistic expectations.

If you're looking to keep your prices up and maintain your margins, the best way to do so is to show your customers, objectively, what prices others are paying. In other words, show them that, even in this market, people are paying the prices you're asking and that the market doesn't bear the type of discount they're asking for.

In truth, if you can't, then they shouldn't pay your high margins. I guess the research I suggest you provide above (in terms of comp sales) is important research for you to do for yourself as well - make sure your goals are achievable and in line with reality.

While all sales people need to focus on margins, there are times when they're happy to just make a sale and keep their job. Pushing for a large margin is a good idea if others are doing the same. However, will you be upset with yourself if you lose the sale because of that push? Figure out what others are doing, prioritize your needs (margin or sale) and execute effectively. There's not much you can do to coerce buyers to purchase from you at a higher price than others are charging and if you "rip someone off" you lose the opportunity for future sales or referrals.

Good luck.
Stephen -sfrenkel

Best way to keep a gross in an car sales is to stay off the price and the trade in value. Most dealerships use a "4 square" penciling, which consists of four squares with "Sales Price", "Trade in Value", "Down Payment" and "Monthly payments". By keeping them off the sales price and trade in value squares and focusing on the down payment and monthly payment squares, you will off course hold more gross. 90% of the time the sales price doesn't really matter... What it comes to is monthly payments. Simple state, "Mr. Customer, I do understand that Price/Trade is important to you, but what is even more important is making sure we can fit this vehicle in your monthly budget. What type of payment range are you looking for?"
Now a majority of buyers only care about the monthly payments. After first pencil they usually forget about the trade and the sales price.
For the 10% who only care about the Sales price or trade, you need to use a variation of "Splitting the difference close". If you are at 20,000 and the customer wants to pay $15,000 just tell him you'll split the difference.
"Mr. Client, I understand that you want to be at $15,000 but the cost of this vehicle is $20,000. How about we split the difference and meet in the middle? Lets go $19,000." The customer will usually respond "Wait, $17500 is in the middle, not $19000" This gives you room to bump them again. "Ok Mr. Customer, I'm not sure if I can, but if I could get you between $18,000 to $18500 do we have a deal?" You just bumped them 3 times w/o customer fully aware you are bumping them, and then you use a "Conditional Close" to seal the deal. -jrboyd

The problem with auotmobiles people know the real costs and want to work from the bottom up. The age of the internet allows the consumer product knowledge.
As with what everyone has repeated the value has to outweight the dollar.How you manage raising the value will let you keep the margin you want.
I have found when compromise hits,the person compromising will adjust a minimum three times. -rich34232

Techniques and tactics are mainly the preserve of the old school 'streetwise' or 'tough guy' ploys and tricks school of negotiations.

If you think they'll work for you then you'll find lots of them in the work of Karrass (late 1960s and early 1970s) the original pioneer of this school of negotiation training in the USA.

However, Fisher & Ury came out in the early 1980s with what might be described as a complete rebuttal of the main ideas and assumptions that Karrass implied.

In actuality, unless you're involved in one-off sales and ethics are not important, and you are dealing in basic situations (business-to-business complex sales will not fit into these simplistic models) and with people in very short-term situations - ie. you don't care too much about what happens after you've dealt with them and made a sale - I can't find too much to recommend about the ploys & tactics school.

There are numerous drawbacks and disadvantages to it, namely:-

- every ploy or trick has a counter-ploy (neutralising it);

- you can quickly develop a bad reputation in business (and therefore need a constant supply of new victims);

- to an experienced savvy negotiator they'll only punish you for the insult and you'll not likely further your cause if you ever risk entering a ploy-driven confrontation with someone you wish to do business with.

From a negotiation training perspective (if you're a company wanting to educate your workforce):-

- people can forget which ploy or tactic (or counter-ploy) they're supposed to use in each situation;

- people select the wrong ploy or tactic/counter-ploy to use;

- people encounter a situation that's not been covered in their teachings.

Also...

- your staff may earn themselves a reputation for being 'manipulative';

- your corporate culture (if it's consultative-based selling) may suffer from the counter-productive effects of the ploys & tactics based negotiation school's approach;

- the training itself is centred on passive materials, and isn't very effective to begin with (are you going to be able to memorise over 200 ploys and tactics?)

- when everyone else has the same knowledge in ploys & tricks & counter-ploys, it simply cancels itself out.

If you're familiar with negotiation theory and practice, there isn't an awful lot to recommend about the old school tactics & ploys approach.

However, since it's so ingrained and predominant in most of American business as it is widely held conventional wisdom (Wikipedia has an excellent definition of this) you can - and should - take full advantage of this!

(with apologies for my British spellings)

PS there's an amusing little film about used car sales, with an interesting special features set included on the DVD. The title of it is called 'Suckers'. Perhaps it's worth a viewing. -ThirdForceNegotiator

This is an interesting thread and I'm glad to see it re-opened.

You can't separate "negotiation skills" from the hard fast principles of strategy. That said, I agree with Skip's earlier refelections but I also am very impressed with what JR wrote above. The part I quoted in bold is purely strategic, and kudos to JR for sharing. I'm not in line with JR's presentation or conversational skills in his example, but I love the way he isolated the key factors that would bring a deal to closure. -Ace Coldiron

This is really not my industry, I know very little about automobiles.

But in the different industries I have worked in, I have found that the best way to raise prices, is by offering more in the product.
If you can add a service or an extra TV-screen in the back seat.

I find that most customers are willing to pay for extra services and that you can make a lot of extra money by offering them the chance.

//Daniel -LookingDaniel

you see this in insurance frequently. When you have a product that has higher than expected utilization, many companies, rather than raise prices on existing product, will offer a new product with additional revenue neutral enhancements at a higher premium. That way they can honestly say that they have, in the case of Aflac, not raised their rates in over 50 years.

Aloha... :cool: -rattus58

If you do that to me you will have instantly lost all your trust and credibility.

Auto sales people have a particular problem in that the public opinion of their trust, credibility, and integrity is about as low as it gets.

Coming at this from the customer's side, I've been buying cars from ONE salesman for twenty eight years. I've sent him hundreds of customers. All because he acts with integrity. The last three times I've bought a car from him, we never discussed price. Why? I knew the deal would be fair. I want him to make money. I expect to get a good deal. I TRUST him to come up with a price that meets both objectives.

I am just one of many who has this kind of relationship with him. He is the top salesman at the dealership.

Act with integrity and you will attract the kind of customer that allows you to meet your financial goals. -DaveB