Pricing goods and services can be challenging. You have to assess the true cost of your product, the value the customer attaches to it, how you position your business, and where your competitors are positioned. It’s something that’s heavily researched, analyzed, and deliberated. After all, that price could significantly affect your bottom line.
Negotiating or bartering for a discount is commonplace in certain industries and cultures, and no matter how good your value proposition is, there will always be someone looking for a deal. So, what should you do when your customer asks for a discount?
Train Your Team
It can be tempting to offer customers just about anything to close a deal, especially if you don’t understand its implications for the company. This is why it’s essential to train your employees to deal with requests for discounts.
Customers don’t want to hear that your employees lack the power to give discounts; they’ll simply ask to speak to the manager. To avoid this, provide staff with parameters in which they can be flexible with price or bundling products together. Give them the confidence to make their own negotiations.
Similarly, training your staff on the value proposition of your products and business is essential. Teach them alternate ways to get the deal done. Although most people are uncomfortable asking for a discount, be prepared for the situation to arise at some point.
Find Out Why They Want the Discount
People are always looking for ways to save money. But it’s not the only reason people ask for discounts.
If a customer asks for a discount, train your sales team to ask why your company’s rate doesn’t seem appropriate. If they say your product is expensive, ask them what they’re comparing it to. Perhaps they’ve seen it at a lower price elsewhere. If they’re comparing your company to a competitor with cheaper prices, explain the benefits of working with your company. Whatever the reason they ask for a discount, it’s critical to understand why they’re doing so.
Here are some more ways to respond when a customer asks for a discount.
Add or Remove Value to Justify a Discount
There are two strategies to protect your prices while offering discounts:
- Add value – For instance, if a service costs $1,200 and the customer wants a $200 discount, add another service valued at $200 to keep it at the original price. Alternatively, if a customer asks for a discounted hourly rate, ask for a commitment of a certain number of hours.
- Remove value – For example, if you’re selling a yearly subscription worth $1,200 but the customer would like it for $1,000, offer to give it to them at that price, but only for ten months.
Create a Sales Strategy
The key is not to sell yourself short. Set a fair price, know your boundaries, and stick to them. There’s always a risk of losing a sale by not delivering exactly what the customer wants. But, if you’ve priced your product or service to reflect its true value, this situation will be rare. More often than not, they’ll agree to buy your product or service at its original price anyway.
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