One of the most common reasons a business isn’t making enough money: the willingness to reduce price in order to close a sale, fast.
This is a terrible reason to cut price.
The moment you do, you signal that your services aren’t worth full price. The client who asked for a discount agrees, as he doesn’t value your services enough to pay full price. Now, he becomes “that client” – the one who nickel-and-dimes you.
Price discounting is the tool of a weak salesperson. You are not a weak salesperson.
Step 1: Don’t Discount
Asked for a discount? Walk your client through your proposal to show how and where you provide value, then ask to move forward at the current price. Once he sees the value laid out, a serious client is not going to leave you over 10% – and if he does, he’s not a good fit for you. Help the client understand that you’d love to work with him, but that if you reduce price, you wouldn’t be able to deliver the rockstar services he wants.
Step 2: Discount For A Purpose
If your customer is going to save you money, you can pass on a portion of the savings to her. Short of cash? Consider a small discount – two, three or five percent – for 100% prepayment, so that you don’t have to pay to borrow money. Need more consistent business? Offer a small discount for a long-term contract.
If your client’s budget is too small, but not below your minimum purchase, reduce the scope of the services provided. But keep your margins.
Just Say No
A few useful responses:
- “I wish I could do that for you, but I can’t.”
- “Absolutely – if you can pay in full today.”
- “It sounds like you really can’t afford the full investment – is that the case? If so, what is most important for you to achieve, and what is your budget for this?”
- “I could totally do that for you. But I really can’t ask my people to work for free.”
April 24, 2013