The Second of Six Traps to Avoid When Negotiating Large-Quantity Book Sales

(Editor's Note: This blog is the second in a series of six blogs, each including one of the six traps to avoid when negotiating large-quantity book sales.)

Most publishers are not skilled negotiators and may feel at a disadvantage when dealing with a person trained in salesmanship. Yet in most cases, a sale may be more likely if you know how to recognize and avoid the situations that could automatically disqualify you as a sales professional. In a series of six blog postings I will discuss each of the top negotiating traps in which you could unknowingly find yourself.

Trap #2: Focus only on price

Price is only one of the quantitative factors that come to bear when negotiating a large-quantity order, and rarely is it the most important. Terms, relevance of your content and delivery date are all rational details that factor into the equation. Yet inexperienced or desperate publishers/negotiators feel they must continue discounting the price until the buyer says yes. An astute buyer will let you continue discounting as far as you will go, but to do so only minimizes your profitability. Here are several reasons why should you not focus primarily on price as a negotiating tool:

• Price not the same as cost. Corporate buyers use your book as a tool to help them reach one of their goals. This might be an increase in sales of Product A. Let us say that your book is priced at $19.95, and the company is interested in purchasing 5000 copies. If you finally agree to a 70 percent discount, the book is priced at $5.98 and you will receive $29,995. After production expenses you would probably be satisfied with the result.

But what if using your book as a promotional incentive generates $2 million in incremental revenue for Product A? The $29,995 is a minor cost (1.5 percent) required to generate that increased revenue.

Instead, focus the negotiations on the forecasted incremental revenue ($2,000,000). The cost of the incentive to generate this revenue is 1.5 percent of the total. Once they are thinking in terms of the $2 million of additional revenue, $39,900 (a 60 percent discount for a final price of $7.98) does not seem that much different. That is about 2 percent of the incremental revenue. Now your negotiation is focused on an increase in their cost of .5 percent. But at the same time, you receive 33 percent more money by not reducing the price from $7.98 to $5.98.

• You invite competitive price comparison. If you focus on the price of your book instead of its value you make it easier for the buyers to substitute a competitive title for yours. If in their eyes several titles are similar, why not go for the least expensive?

Know your competition and sell the reasons why your content is superior. Sell yourself as a competitive advantage. Build your credibility as the source of the information in your book. Offer to train the company's salespeople, meet with customers or serve as the corporate spokesperson. Remember that you are a major part of the sale, and there is no price on the value you bring.

• Production quality could suffer. If you drop the price to the lowest point at which you can be profitable, you may cut corners in the production process to save money. Do not allow yourself to fall into this trap.

• It's better to control the terms rather than the price. Instead of spending time negotiating an acceptable (to both parties) price, think about how you might benefit by control managing the terms. For example, what if your prospect says, "I will pay you $1 per book for 5000 customized copies"? Your first reaction is to laugh (or cry) because that is totally unacceptable as payment for your books.

But what if you reply with terms that are beneficial to you? You might say, "I will accept that price if you pay $20 per month with 50 percent interest compounded monthly on the unpaid balance." Of course a negotiation would never play out like that, but that absurd example demonstrates the point: there are times when you can yield on the price issue but still maximize your revenue by negotiating favorable terms.

• You could show them how they can afford it. If the buyer's budget has been reduced or depleted the answer will be no. Before they make that decision, suggest different payment arrangements. Perhaps a smaller deposit with a percentage of sales. Could they license your material? Show them how to get financing. Delay the payment dates. Accept post-dated checks. Offer to train their sales people. Write literature or press releases for them, saving the cost of a publicity firm. Form a joint venture or strategic alliance in which you both share the revenue on all sales. Be creative and come up with options other than reducing your price.

• You lose sight of your objective. People generally buy from people they like, and do not buy from people they don't like. A sale is more likely to be finalized because you spent time building a relationship with your prospect. If your focus is on how much money you will make from the deal you will not be construed as a consultant, helping the company's representative solve a problem.

Favorable economics are a necessary but insufficient condition for a sale. Both parties must benefit for a long-term, mutually profitable relationship. Focus on the people in the discussion. Get each on your team and you will find less need to discount your price.