I heard about a buyer who was informed he could have a 17% discount for a $20,000 order, but he couldn’t calculate the discount in his head. He turned to his assistant and asked, “Betty, if I were to give you twenty thousand dollars with a 17% discount, how much would you take off?” She immediately said, “Everything except my earrings.”
So now you’ve had your “grin” for the day. The point is, when people ask about my feelings on giving discounts, my short and simple response is, “Don’t give ‘em.” (There are of course exceptions, and I’ll get to them shortly)
The reason I respond as I do is because I believe regular discounting causes damage in several ways.
- They devalue your services and make it appear you don’t think they are worth your quoted price.
- It sets a precedent for customers to expect discounts on subsequent proposals you make down the road.
- Discounts create lack of trust because prospects wonder why they had to ask to get the better price.
With those reasons as background, here are a half-dozen good substitutes for discounting requests.
- Offer to remove a component from your proposal. “I can’t reduce the price but is there something you would like for me to remove from my offering to help reduce the price?” (They probably want it all and will see you are firm on pricing)
- Scale down from your BEST to the BETTER (mid-quality) package. “I’m not able to cut the price, so would it help if you went with our standard service instead of the premium one?”
- Recommend a “like new” return or demo product. “To trim your outlay for this project, if you’re interested I can save you some money by installing a new unit that was only in a home for two weeks. That homeowner decided to upgrade to a higher capacity model, which is what I proposed originally. It would come with the same ten year warranty as one out of the crate.”
- Include something of value that wouldn’t be costly to you. “I can’t discount that price, but I would be willing to provide a free training session to introduce your people to the new system, rather than everyone having to figure it out themselves.”
- Suggest to throw in a valuable perk that doesn’t break the bank. “I can’t drop my price below what I quoted, but I will commit to be here personally with the technician on installation day. This is out of the ordinary, but I’ll come oversee the work to ensure it’s done to your specifications.”
- Provide financial options. “I can’t cut the price but I will commit to what we call, extended billing. It offers up to 90 days same as cash, instead of our normal net 30.”
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As good as the discount substitutes are that I just penned, sometimes they need to be offered. When those times come it’s critical to remember to not give up anything unless you get something in return. The customer must earn a discount, as this is the keystone of negotiation. Here are a few ideas that should be helpful.
- Give to get. Ask for something in return when a discount is offered. “I am willing to discount my offering price by 5% if you commit to introduce me to three solid referrals, fair enough.” You might offer the same discount for a video testimonial or a Google review.
- Ask for a longer agreement period or an annual payment in advance. “If you will sign a two year agreement, I can discount my price by 5%. I could also do 10% for a three year agreement.”
- Offer a discount for bundling multiple services. “One way I can provide a 10% discount is if you allow us to replace and upgrade the duct work, in addition to installing the 18 SEER air conditioner.” (Maybe even 15% off for a three-service bundle)
Now that you’ve read this post, if you are still struggling, get an immunization shot for your discount allergy!
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