SALES QUESTION: "When in the negotiation phase, I'm being asked for a better price. I know this is going to happen so I've started leaving a little room to move, however after I give a price break, I'm hearing "OK thanks, we will get back in touch with you" but then they end up buying from my competitor. How can I stop this from happening?"
SalesBuzz Answer:
Well, while I can recall all of the "sales guru" books that I've read adamantly stating how you should never lower your price, you should sell value etc, this is the real world we are talking about. So let them lecture us in a book about how we shouldn't offer an added incentive while I show you how to avoid getting shopped and losing the deal on the final lap.
One Simple Question...
First things first... you want to uncover the prospects intentions when they ask for a better price. You want to know if:

1. They are ready to move forward if you can offer them a better deal.
2. They still need to go get final approval.
3. They are using you to get a better price from a competitor. 

So anytime I'm faced with the above scenario, I've found that by asking one simple question, I can uncover the prospects intentions, and then choose my next appropriate response:
PROSPECT: What's the best price you can do? / What kind of discount can you offer?
SALESPERSON: Mr./Ms. Prospect, assume for a moment that we can come to terms that you are happy with... What happens next?
OK NOW REAL QUICK...
Notice I didn't say we could offer a lower price? What I said was "assume for a moment that we can come to terms that you are happy with".
So I'm not saying we can or cannot offer a lower price. We aren't there yet. But this is important phrasing because one of the best ways to close more sales without losing profit margins is to offer something of additional value once the prospect is committed to moving forward but wants to negotiate. But it's too early to make a counter offer or give a rebuttal yet that justifies the asking price. Got it?!?
Ok so back to what we were discussing... Prospect asks for a better price and you respond with:
"assume for a moment that we can come to terms that you are happy with... What happens next?"
If your prospect responds with: "if the offer is good enough, we sign up now" then you are truly dealing with a player. They've shown their hand that they are ready to play ball.
Now of course, this is the time where you can offer your "reason why we are worth it" rebuttal or you can cough up your better offer and close the deal. That is up to you. Personally, I like to go one step further once I've identified their true intentions (which is to move forward) by asking this follow up question first. Here's the sequence:
PROSPECT: What's the best price you can do?
SALESPERSON: "Assume for a moment that we can come to terms that you are happy with... what happens next?"
PROSPECT: "We sign up"
SALESPERSON: "OK... What did you have in mind? / What were you hoping for?"
PROSPECT: "Can you do ________?"
This has the prospect giving you a number that they would buy at. You can now negotiate from there and close the deal by justifying your price, building value or make a counter offer.
If, however, you ask your prospect the "assume for a moment that we can come to terms that you are happy with... What happens next?" question and they come back with a stall or a "well we need to check around" / "discuss it internally" etc, then you know that now is NOT the time to give your best price or sweeten the offer.
You've exposed that they are:

1. Not completely sold on your solution yet,
2. That they may not be the real decision maker or...
3. That you are being used and will most likely lose the deal to the next company your prospect calls. 

And that sales call will go something like this:
PROSPECT: "so and so offered it to us at $XYZ price... can you beat that?"
YOUR COMPETITION: "If I could, would you?"
Your prospect says "YES" and buys from them. That is what's most likely happening. You're giving up your best offer without getting a committment from them first.
I'm all for "negotiating". Sometimes that means you need to adjust your price and other times you can offer something of additional value in order to keep your asking price. Other times, the price is what it is and that's the way it needs to be.
But regardless of what your pricing structure and options are, be sure to uncover your prospects intentions, before answering. This will go a long way into helping you shorten your sales cycle, avoid losing deals to your competitors and help you close more sales.