how you can avoid being taken advantage of in sales negotiations

© Copyright One Sherpa Pty Ltd 2010

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


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?

TERMSor PRICE?


The truth is that they’re both important.


It’s not a case of EITHER / OR

It’s a case of 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 INCREASE10% on $200,000 would be an additional $20,000 in sales


$20,000 more Sales

Increase in Marginfrom 20% to 21.9%


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

CALCULATION OF CURRENT OUTSTANDING30 Days / 365 Days * $200,000 = $16,438

CALCULATION OF NEW OUTSTANDING60 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.comand make sure you’ve got the best price

negotiation in your business