DEAR STAGE 2: We’re getting pulled upmarket and I’ve had a handoff to procurement in our last two deals. We feel like we have the deal locked and then procurement starts grinding us on price. Should I keep discounting? When do I walk? ~NEGOTIATING FOR MY LIFE
DEAR NEGOTIATING FOR MY LIFE: Pretty great problem to have! You’re getting into enterprise deals, you’re showing real value and winning over the buying committee, and now just need to nail the final negotiation. It might feel like your deal is unraveling, but it’s usually just procurement doing the job they are paid to do. I sat down with Chelsea Hammer, a Stage 2 LP who most recently spent eight years leading sales teams at Salesforce, to talk through how experienced negotiators manage these final steps of a deal. Read on for her advice…
Understand procurement’s goals
In any negotiation, Chelsea advises taking the time to understand the other side’s motivations and confirming/reconfirming as the deal progresses and new players are introduced. This is *particularly* important with procurement: “Procurement people are measured on the differential between what you came in with and what you sold the product for. If I made it to the procurement desk with a $10 notepad and they whittled me down to $8, those two dollars are the value points they show their CFO”. Money saved in a negotiation is a metric they get measured on.
If you start with that premise, you may need to rethink your pricing strategy. Don’t bring procurement the number where you expect to close, because they have to win something. In Chelsea’s words: “Don’t set them up for failure. Why didn’t you just come in at $12 so you could land $10?” Everyone walks away with a result they can defend - everyone “wins”.
Do discovery on the buying process
Most founders run discovery on the problem and pain points, but skip discovery on the actual purchasing process. Chelsea’s bar: map every step and every person, down to who clicks the DocuSign. Not “who makes the decision” (a question buyers almost always answer aspirationally) but who approvals route to, who gets a say in redlines, who owns the budget and who actually signs the contract.
Her go-to opener: “Have you bought something like this before? Great. Walk me through it step by step. Did anything go wrong?” If your contact can’t answer, send them to do homework. And make sure you create a pricing structure that has some wiggle room because surprises are coming.
I’ve personally seen this failure mode in our portfolio: a deal that was “done” gets redlined at the 11th hour by a signer the founder never met. Likely a person who should have been brought up to speed on the deal, and brought along for the journey weeks (maybe months!) earlier.
Walk in with a concession map
Before any big negotiation, Chelsea had her teams fill out a simple worksheet (for internal use!):
What we have already conceded?
What we are still willing to concede?
Are there any conditional concessions we would only make if the deal changes shape?
What is our walkaway price?
Building this out ahead of a negotiation call or meeting gives you confidence and ensures you’re making decisions with a clear head, not when emotions are running high. “You go in with a roadmap. I have my best case, I have my walkaway. The negotiation may be stressful, but it’s not like you’re trying to drive down a country road for the first time in a vehicle you bought yesterday.”
Chelsea also advised thinking through what tools you have outside of discounting. Before you jump to a discount, ask what else makes this deal good for them. Payment terms? Reference rights? Flexibility to swap products later? There are endless ways to construct a deal, and if you never ask, in Chelsea’s words, “you could be taking a discount when you could have offered something else that doesn’t cost you something.”
The optimal give is something that is of little value to you, but high value to the client; and the only way to get there is to deeply understand their position through building a trusted relationship and daring to ask the question.
Use approval layers as leverage
AEs at big companies use their discounting matrix and approval chains deliberately and strategically. Chelsea’s best reps ran the first rounds of a negotiation solo, knowing they would eventually hit an ask they could not grant. That allowed them to use inviting an exec to the next call as an escalation and part of their deal strategy. When Chelsea joined a deal as the leader, she arrived with finality: “This is what I’ll give you, and it’s the end of the line.” And she means the end. The escalation only works if the senior person actually says no, because otherwise “it’ll just never end.” You should justify the end of the line with value - it’s not the end of the line because of an arbitrary reason, but rather because it’s the appropriate exchange of value and/or it’s not in the best interest of your organization. Their interest as your client is for you to have a healthy organization too. Chelsea finds that when you can defend the end of the line with some business logic or value statement, that resolution is something everyone can respect and walk away happy with.
One warning from Chelsea: don’t overuse it. Deferring is a delay tactic and procurement knows it. If every answer becomes “let me check,” you stall the deal and lose momentum. Save the escalation for only the final asks. For everything else, the stronger move is standing behind the value. Her analogy: if you’re selling water at a football game on a 100-degree day, you don’t feel bad charging the thirsty guy in the stands. If you’ve done real discovery, you found the thirsty guy.
Founders don’t get this layer by default. You cannot say “let me run it up the flagpole” when everyone knows you are the flagpole. But there are times where you can use your board: “my board won’t sign off on that” turns a personal refusal into a boundary outside your control, and it buys you the same finality a rep gets from bringing in their VP. Your investors will happily play the bad guy. The key is that when the board card comes out, it works like Chelsea’s end of the line: a final position, not another round.
Silence is your friend
One final tip from Chelsea…it’s ok to say no and leave it at that. You don’t have to keep talking, you don’t have to justify. It can feel uncomfortable at first, but you have to be ok with saying no and letting the silence hang. Procurement is trained to keep pushing as long as pushing works. Chelsea used to sit on live negotiations and Slack her teams mid-call: “Stop. Stop talking.” If you believe in the value, you have to hold the line and let the silence sit.
We’ll leave you with this: come in with room to give, concessions you’ve mapped out, and a walkaway you set in advance based on the value you’ve uncovered via thorough discovery.
Until next week!
I don't disagree with this, but modern procurement is changing very quickly. In many large organizations, the focus is less on what they saved in the pricing and more on the value realized for the organization buying the solution. I've found "strategic buying organizations" great partners in working with the end buyer to help understand and build value, rather then focus on an older metric on dollars saved. They, as any customer should, want reasonable pricing, but their success is measured on the success of their internal customers. Modern procurement thinking is moving very quickly to this.