About to lose a $530,000 deal

Not sure what to do, savages. was invited to submit an RFP at a top 10 Children’s Hospial. turned in the document (including pricing, references, IT/risk assessment, etc) in May. Completed demos over the summer. completed IT&S review a few weeks ago. Everyone loved us.

Price is $320k implementation, $210k annually (3Y contract).

VP IT emails me last night with an ultimatum. "$300k implementation, $100k annually (3Y contact). I'll get this signed by end of November."

We setup a call for this morning. The only response I get is "that's all we can afford" and "take it or leave it".

I use labeling, accusation audits, tactical empathy ... I got nothing back. Sounds like the leadership committee selected us, but it's 100% her choice based on price. 

I've thought of creative ways to setup the contract so the annually prince goes up if we meet the outcomes/metrics criteria we advertise for hospital safety, nursing efficient, patient satisfaction, etc. But I don't think she will budge. 

What's my next move? Walk? Try to engage another stakeholder? 


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46
Sunbunny31
Politicker
11
Sr Sales Executive
Ouch. Reading the responses, I have not much to offer. However, considering she's pushing back on the annual, which sounds like her OpEx is the problem. Is it a short term problem based on their FY that you could resolve by breaking up payments and/or a ramp period to get them to the start of their FY?
MrMonte
Valued Contributor
3
Head of Sales
Tried engaging in that convo but got the stonewall response “we can’t afford it” and “take it or leave it”.
Sunbunny31
Politicker
7
Sr Sales Executive
I'd be inclined to wish her luck and walk.

That deal you had in front of her is already lost - and I would call her bluff.

I'm sorry.
CuriousFox
WR Officer
5
Senior Account Executive
That's what I said. This shit pisses me off for our friend here.
DataSlangah
Politicker
3
SAE
I agree with @Sunbunny31 , you have to call her bluff. It sounds as if the deal is already lost, so technically, you don’t have anything to lose. Your only two other options would be to counter or accept. It sounds like you have gone down every other path by trying to get creative in the financing and bringing up and solving multiple problems. As a person that now runs a company (yay promotion for me - not so humble brag), I know what I can and can’t afford. This is no different. The selection committee would/should have seen the price in the RFP. They know what they can afford, and it sounds like this person might be trying to save some money and look like some fucking hero.
Sunbunny31
Politicker
4
Sr Sales Executive
Congratulations on your promotion!
DataSlangah
Politicker
1
SAE
Thanks @Sunbunny31!!! It is definitely a double edge sword. The sales piece, I can crush for days, but now I have responsibility for so much more. I mean my last renewal quota was roughly the same as the P&L ~5M, so that doesn't bother me. What bothers me is that I am have to make the hard decisions on HR and other things that I would avoid in the past.
Sunbunny31
Politicker
1
Sr Sales Executive
That is the tough part of being in charge, for sure.
Corpslovechild
Politicker
1
Inbound Sales Manager
Smart thinking
Sunbunny31
Politicker
3
Sr Sales Executive
Well, in this case, a non-starter apparently, but I've found that sometimes the lack of funds is temporary and just requires some creativity to overcome.
antiASKHOLE
Arsonist
8
Account Executive
I'm sure that you have, but did you get your leadership involved as well?
MrMonte
Valued Contributor
5
Head of Sales
My leadership is just my CEO. And he’s not good in these situation, which is why he hired me. Basically the other leaders in our company (clinical director and CTO) wouldn’t have much to add here. In all my negotiating with health systems in the last 5 years at this company, I have not been stonewalled on price after such a long RFP/evaluation like this.
antiASKHOLE
Arsonist
5
Account Executive
That is nuts. well damn, I hope that you find some help then. I haven't really been involved in RFPs personally, just seen them from afar.
Killebrew
Fire Starter
8
Founder/CEO
That's what you get for trying to deal with a hospital run by children
Corpslovechild
Politicker
1
Inbound Sales Manager
You have the best comment in the thread.... BRAVO
MrMonte
Valued Contributor
0
Head of Sales
I see what you did there. You're not wrong.
braintank
Politicker
7
Enterprise Account Executive
Take the deal? I'd rather have any ACV than none...
MrMonte
Valued Contributor
6
Head of Sales
Probably not. Not desperate enough to take any ACV. Also, local health systems talk and it would shoot us in the foot for other sales in the state, at least.
Sunbunny31
Politicker
6
Sr Sales Executive
Always a consideration with a deal.
SaaSsy
Politicker
5
AE
Glad someone had the same reaction. Depends on where you’re sitting for the year but agree either take it or say no. Continuing to negotiate is the weakest stance to take.
Dallas_Knight
Big Shot
7
Strategic Account Executive
Walk, tell them that if the hold up is based on price that they can discuss with other vendors but at this time We(you and company) are already giving you a 30% discount on the annual contract. As a business decision a 67% discount would lose us money.

See what the reaction is and if they want to negotiate further or not. Gov contracts try this all the time after the deal to strong arm, its more than likely that if you were picked the budget is approved but your contacts gets paid either the difference or a percentage of the difference for saving money in the budget
MrMonte
Valued Contributor
1
Head of Sales
This is my new favorite response. Thanks!
Sunbunny31
Politicker
4
Sr Sales Executive
I hope you try this, and I hope it works. In any case, please update - I suspect many of us want to know how it goes.
jefe
Arsonist
5
Head of Sales
I’ve never heard of this with an RFP. Sorry you’re going through this, not sure your best course of action.
MrMonte
Valued Contributor
3
Head of Sales
I said something similar to her. She said “just because you presented it and were selected doesn’t mean we were prepared to pay that much …”
jefe
Arsonist
6
Head of Sales
The fuck kind of response is that!? What else could it mean?!

Is she the final bottleneck? Do you have another avenue?
MrMonte
Valued Contributor
3
Head of Sales
I’ve been told by my POC that she is the only one to negotiate with. I’m not sure I agree, because clinicians see the value but I don’t have a clinical champion on that level that I’m aware of.
jefe
Arsonist
5
Head of Sales
Ugh that is both frustrating and ridiculous
TheIncarceration
Politicker
3
SDR Manager
That's such BS! Why even accept your bid then?
CuriousFox
WR Officer
5
Senior Account Executive
Question - are you using GPO pricing?
MrMonte
Valued Contributor
3
Head of Sales
No, we are not part of any GPO.
CuriousFox
WR Officer
5
Senior Account Executive
Ok so that idea is scratched. This may be one you need to be comfortable walking away from dude. They will own your ass otherwise.
discolove
5
AE (Account Executive)
Empathize, reiterate value and business impact, then be willing to walk.
TennisandSales
Politicker
3
Enterprise Account Executive
DAMN. she is playing hardball.

could you extend the contract to 5 years to lower the cost? would your company go for that?
MrMonte
Valued Contributor
4
Head of Sales
I don’t think discounting make sense.

We have another hospital where we cover 25 patient beds for $100k/year. In this deal I’m about to lose, the health system has 175-200 patient beds we would cover. It would normally be $295k/year but I was trying to get them a better deal at $210k/year.

Other hospitals with the same size and scope are paying us $300k/year or more.
SaaSam
Politicker
11
Account Executive
Highlight the fact that you have already fought to get approval for 210 instead of 295. Don't try to "justify" your pricing by breaking it down. If she still doesn't budge, try to find someone in their org that will be the most positively affected by bringing you guys on and have them act as a cattle prod.

The person with the most power in a relationship has always been the one who cares the least and is willing to walk away. She's already positioned herself as that person. You have to be willing to walk away.

I walked away from a 300k deal back in March, same dude reached out to me last week looking to do 500k and likely to close end of October. Best part is, they now know I'm willing to walk away and have been much more cooperative thus far.
MrMonte
Valued Contributor
4
Head of Sales
This is what I’m leaning toward. Which sucks but seems most reasonable.
RedLightning
Politicker
3
Mid-Market AE
"The person with the most power in a relationship has always been the one who cares the least and is willing to walk away. " That's extremely eye opening I need to take that approach more often
bassinshaps
Politicker
1
Territory Sales Manager
It’s funny, I was about to publish a response. Something like “either make a concession or walk.”
But I realized I do this more often. I usually say “I fought to get this pricing for you guys, and you are getting a killer deal.”
It definitely works.
Sunbunny31
Politicker
3
Sr Sales Executive
It does, but for that small percentage that digs their heels in and doesn't operate in good faith OR in their own best interest...sometimes you have to walk. Walk away from a bad deal.
washedD1soccer
Politicker
3
Regional Sales Manager
Is it going to cost them anything in the extra time it will take to find another vendor should you bow out or was the RFP process thorough with some other vendors?

Hospitals are tough these days as the focus on best product has been replaced with what’s cheapest and gets the box checked.

Maybe it could be worth a try to understand why they can only afford the $100k annual. Is it based on budget left for the year? Hard cap for the project?
MrMonte
Valued Contributor
1
Head of Sales
Theirs basically one other vendor that went through the whole process too. But their clinicians were not thrilled about them. So it would be status quo (using their EMR which doesn’t get the job done) or the other vendor (who their clinical staff doesn’t want).
Herb
Fire Starter
3
Account Executive
I’m unemployed, so my opinion doesn’t mean 💩, I would explain, “Great, I understand your financial concerns, let’s do this, 1 year at your WANT, if after a year, you feel confident as I am about this will affect your sales, 5 years contract @250k, this help clear your concerns, and ROI will be obvious, so no problems going forward agreed?
MrMonte
Valued Contributor
3
Head of Sales
I’ve considered offering this option. Problem is I don’t think any outcomes/metrics we achieve will get her to change he left stance. If I go back in email or over the phone with this offer, I look weak/desperate and expect her to shoot it down again.
highperformingsales
Personal Narrative
3
VP of Sales
You've received a hostile (and completely garbage) ultimatum that you need to walk away from. This VP probably believes that she can squeeze you out of desperation for the sale and from a hunch that you need her more than she needs you. You should simply state that the reduced offering is not possible for the services that you provide, and you wish her the best.

If you give in to this, word will get out and you will face this more and more. Also, it is an attack on your value as a whole.
Kosta_Konfucius
Politicker
2
Sales Rep
That is hard, have you met since getting that email or has this convo been done entirely via email
MrMonte
Valued Contributor
2
Head of Sales
After the email last night, the convo in which she repeated “that’s all we can afford” and “take it or leave it” was over the phone.
Kosta_Konfucius
Politicker
2
Sales Rep
I feel like you need a group call with their leadership and her, have a call with your leadership to get approval on further discounts to see where the line is.

As you have been doing, use empathy throughout this process.
butwhy
Acclaimed Answer
2
Solutions Engineer
Oh, really like the idea of making her say this on the line with her leadership that made the RFP decisions. That's an interesting way of getting backup or at least witnesses.
Pachacuti
Politicker
2
They call me Daddy, Sales Daddy
How involved is YOUR leadership in this? That kind of price change is a decision they need to make. And there definitely is some egos in play here.

That is some brutal tactics though on the client side. It sounds like they are looking for a middle ground price.

I would either stay with your current pricing and outline where it gets allocated and why it’s a value to the client. OR I would provide a compromise price that meets them in the middle.
MrMonte
Valued Contributor
2
Head of Sales
I’m the head of sales. I’d have to convince the CEO. But I think he’s beholden to investors who he’s pitched a higher annual fee for these types of deals.
butwhy
Acclaimed Answer
2
Solutions Engineer
I don't have a solution - this sucks and is a sticky situation. I do think getting to someone else, even if she is the final negotiation; it never hurts to have more customer champions in your corner.

But the thing I keep finding interesting, having worked a little in the nonprofit space, she is only really wanting a discount on the annual instead of the implementation fee. That's the opposite of what I usually see.
MrMonte
Valued Contributor
3
Head of Sales
Her point is the annual operating margin is slim. I’m read the hospitals financial report for 2021 now:

Looks like they have money in several forms.

1. Available for reinvestment in mission $96 M
2 Not to mention philanthropic support from the foundation.
butwhy
Acclaimed Answer
2
Solutions Engineer
Yeah, gut says lay out the value of the deal and all the leadership decisions on her side that lead to this decision and give a final price as you prepare to walk. Ugh, fingers crossed she backs down.
saaskicker
Celebrated Contributor
2
Enterprise AE
does the VP of IT benefit from this solution the most? or can you tie value back to other departments?
MrMonte
Valued Contributor
1
Head of Sales
I really don’t think she does. I think she’s the budget holder, and the bottleneck to closing the sale. All we do it tie value to the nursing department - who is consistently effed over at every hospital.
saaskicker
Celebrated Contributor
0
Enterprise AE
I think you need to build an internal champion in the nursing department with some clout and have them sell for you.
ADK
Contributor
2
VC Associate
Sounds like it's intentional someone who's not a champion is assigned at this very last stage who only qualifies the offer as a number (and definitely with BS reasoning) whereas you may have more emotions involved being worked on it for this long. If I rephase the title of this thread and put it this way, how do you feel: "About to win a$400,000 deal?"

Besides that, is there already a heavy discount on this and more importantly does 400K bring you to more of a losing game? I don't think she'll budge and it's important for her to think she's winning something, is there anyway for you to meet you in the middle? So, it's your "take it or leave it" but she's also winning something
MrMonte
Valued Contributor
0
Head of Sales
Can't do the $400k deal, because it will directly impact future deals with other hospitals in this State (at least).
ADK
Contributor
0
VC Associate
Got it, yeah regulations aspect. Do you know other competitors in the mix and what they might have offered price-wise? It's a bit counter intuitive to me that you seem to be selected but if the price was this much of a deal breaker for them, you probably wouldn't have been selected in the first place. Other than walking away, maybe ask her the only way to bring the price down is if they reduce their requirements and that you already shared the best proposal.
bassinshaps
Politicker
2
Territory Sales Manager
I think you should first try the approach highlighted by @SaaSam <br>If they can’t play ball with the KILLER pricing that you’re offering, either make a concession to fit their needs if it’s doable, or walk.<br><br>If they have indicated to you that they NEED your product, you need to re-emphasize that. Because if it saves them money, they can’t afford NOT to go with you at that point. Especially if you have proven how much money they can save by doing so. <br><br>

Another approach is finding a plan that maybe doesn’t have ALL the features the original one did, but fits their budget and is still equitable for them.
MrMonte
Valued Contributor
1
Head of Sales
Most likely will have to walk.

Our product doesn't involve piece meal pricing. It's all or nothing.
bassinshaps
Politicker
0
Territory Sales Manager
Gotta do what you gotta do. Sometimes good deals go bad.
Corpslovechild
Politicker
1
Inbound Sales Manager
That sounds REALLY steep. Will your company even allow you do to that?
MrMonte
Valued Contributor
0
Head of Sales
No, it would not make sense for us.
Corpslovechild
Politicker
0
Inbound Sales Manager
Then you have your baseline sell through it or walk away
Corpslovechild
Politicker
1
Inbound Sales Manager
Would they be willing to sign a longer deal to get a bigger discount?
MrMonte
Valued Contributor
0
Head of Sales
No chance they're getting this discount or a bigger one from me.
AnchorPoint
Politicker
1
Business Coach
Why is budget a surprise "after" presenting solution?? Was that not covered in discovery? If so, what changed and why?
MrMonte
Valued Contributor
0
Head of Sales
This is a RFP. I've never had a RFP from a hospital system share their budget. They generally evaluate the proposals from vendors, then go to a project management office and submit a request for funds, before coming back to the vendors for a final review and decision.
Wellace
Good Citizen
1
strategic sales associate
I think I stole this deal from you. I sell to health systems and health plans.
MrMonte
Valued Contributor
0
Head of Sales
Haha - my product is pretty niche, so not appropriate for health plan customers. But happy to hash it out in the DMs.
SDM
Valued Contributor
1
Sales development manager
Try to engage and unpack the reason for 100k( that low) tight budgets could be the reason but going that won't add value. I'd suggest give her your best offer and pause for a few days... If your solution is falling in top 3 choices, you have chance.
MrMonte
Valued Contributor
0
Head of Sales
This is the playbook I used in the first call. Wanted to understand where the 100k number came from. Got no context. Just "that's all we can afford" and "take it or leave it".
KB_FarmerType
Opinionated
1
Strategic Sales
If it has really come down to the price and their affordability is “really” a problem , they will exhibit different signals, they would start selling back to you why you should do the deal at 100k. If they aren’t aggressively selling it to you, likely this is just one person acting hardball and your best bet is to draw the line and stop nego, hard baller needs to feel they have hit the stonewall in you.
MrMonte
Valued Contributor
0
Head of Sales
This is what I want to believe. One person playing hardball. Similar to @Dallas_Knight's assessment.
MatheusCalvo
1
Auxiliar ADM
NOOO, More LUcky in next oportunity
Diablo
Politicker
1
AE
Now that she told you what she expects I will consider to be a lost deal but I’ll make a few attempts before killing the opp.

I would be transparent with the reason why we cannot offer what she asked. I will ask her if she is willing to sign a longer contract and leave her with the best option what we can and also tell her why we cannot offer what she asked. I will loop in my manager so instead of me, he can follow up (being a bad cop/good cop) depending upon the situation.
MrMonte
Valued Contributor
0
Head of Sales
Agreed, except my manager is the CEO and he's prone to losing his cool in these situations.
revenuegenerator
Good Citizen
1
Sales Management
I would at least shoot her a counter (if for nothing else to get a more active discussion started)

It sounds like licensing is the concern, 20K off a 320K implementation shouldn't be a problem to take in most industries.

No clue how you guys license, but is there a different way to structure the licensing? Just taking a stab in the dark here....

If they have 300K over 3 years to pay for licensing and your list cost to her is 630K over 3, can you give her model where she just draws down against 300K work of license over time? (with a 300K implementation, they can't be using full product/license on day 1 right?) With the full expectation that it won't get them to 3 years but at least will get them half way there to a hopefully better economic environment with the expectation that you'll work with them on it.

You also have some good ideas there. IMO i would put some numbers in an email over to her. No fluff, just raw #s to see if it gets her talking.

If you guys are a big company there's no way you'll take a 50% haircut on licensing. If you're small, maybe if she agrees to do a lot of marketing for you all that will make up for the discount?

Last note.. there's strong possibility she sent those basically 50% off offers to the top 3 vendors, all of which they'd be okay with, and she's just looking to see who'll play ball to land their name as a customer.

Good luck doood.
LegacySales
Politicker
1
Account Executive
Yikes... This also sounds like a deal where management says "Hey we're not running a non-profit and our product costs more than a nickle."
These deals are particularly painful bc a rep will invest alot of time, updated notes, follow-ups, deck proposals and all of the other supporting material to get it closed.
SalesWhisperer
1
Division Sales Manager
They've selected you. Will she share with you why she's not able to afford it? If not, you've exhausted all rapport techniques, she's not budging, and if you cave, this will be a repeat story throughout the state.What happens if she has to go back to her team and tell them she couldn't come to terms? How would she be able to save face? High-stakes poker, but I'd be willing to call her bluff. One option: Since it's not affordable for you now, how about we reconvene towards your next FYE, and maybe there will be more allocatable room in the budget at that time? or 2nd option: Thanks for sharing with me about your inability to afford it at this time. We'll be happy to move forward. For that price, we're able to do (xx) (scaled back to whatever you'd do for the price she's offering.) Curious as to what you choose to do and the result. Best wishes!
Jace
Contributor
0
Account Executive
Honestly, Walk.
Here's why, when you choose to walk after relationship building like this it shows who really wears the pants in the relationship. Also, as you know @MrMonte(VP of Sales) Another contract will always come around.
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What do you do when you lose a deal?

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Best way to pep up when you lose a deal?
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A deal you would unclose?

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