discount
Article

What To Do When Your Customer Asks for a Discount

Pricing your goods and services is no easy task. You have to assess the true cost of a product, the value that the customer attaches to the product, the way you position your business, and where your competitors are positioned. It is something that is researched, analyzed and deliberated. After all, that price could have a big effect on 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 happens when your customer asks for a discount?

Train Your Team

When you’re focussed on selling, it can be tempting to give the customer anything to close the deal, especially if you don’t understand the implications on the company by doing so. Provide your employees with training on how to deal with requests for discounts. Customers don’t want to hear that your employee lacks the power to give a discount, they will simply ask to speak to the manager.

Provide your staff with parameters in which they are able to be flexible with price or bundling products together. Give them the confidence to make their own negotiations. But it’s also important to train your staff on the value proposition of your products and business. Teach them alternate ways to get the deal done.

The truth is that most people are uncomfortable asking for a discount, so don’t make it easy for them.

Find Out Why They Want the Discount

People are always looking to save money. But saving money is not the only reason people ask for discounts. Although they may say it’s expensive you can ask them what they are comparing it too, it maybe that they have seen it at a lower price elsewhere.
If a customer does ask for a discount, train your sales team to ask her why your company’s rate doesn’t seem appropriate. Most of the time, she will say something like, “It seems expensive,” to which your sales team should reply, “Interesting. What are you comparing it to?”. If they are comparing your company to a competitor, and assuming that your competitor is really cheaper, explain why the benefit of working with your company is worth more to them than the benefit of working with your competitor. Whatever the reason the customer asks for a discount, it is critical that you understand why she is doing so.

Add or Remove Value to Justify a Discount

There are two strategies to protect your prices while still offering a discount.

The first is to add value. For example, if a service costs $1,200 and the customer wants a $200 discount, add another service valued at $200 and keep the overall price at $1,200. Alternatively, if a customer asks for a discounted hourly rate, ask for a commitment of X hours.

The second is to remove value. For example if you were 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 for just 10 months. Or if they are looking for a full page advertisement, honour their price but for a two-thirds of a page ad.

Creating a Sales Strategy

The key is not to sell yourself short. Set a fair price, know the boundaries you are prepared to go up or down to and stick to your guns. Sure, there is a risk that you may lose a sale by not giving the customer exactly what they want, but assuming that you have priced your product or service to truly reflect its value, this situation will be rare, and more often than not, they will agree to buy at your original price anyway.

Here to Help

No matter what stage of business, or what problem you face, Small Business BC offers a range of seminars and one-on-one advisory sessions to suit any business.

View More Articles

About Small Business BC

When you find yourself asking "How do I...?" Give us a call. We'd be happy to help.