Customers ask for a discount. It’s a thing.
And, if you’ve been in business long enough, you’re going to get customers or prospects asking you for a discount. In this article, I’m going to break things down, so when customers ask for a discount, you’ll know exactly what to say.
Why Customers Ask for a Discount
It’s easy to get emotional and take the request for a discount as a personal assault. It’s not. The sales process is a dance between you and the customer. Each of you has a role in the dance and when you understand the steps of the dance, both you and the customer will have a great experience.
Let’s break it down.
Because they have to: discount requests are required
There’s an old saying, if you don’t A-S-K, you don’t G-E-T. In other words, customers have to make discount requests because they have nothing to lose and everything to gain.
It doesn’t matter whether you offer discounts or not, expect your customer to make a discount request because they want to take every opportunity to NOT pay full price.
They don’t have the money
Another reason customers ask for a discount is because they just don’t have the money.
It’s possible that they simply don’t have the money. And that’s ok. Do NOT offer your product at a discount, but you can have a conversation what might work for them such as a payment plan (where they pay 20% more on a monthly basis).
Another fun exercise is to make a list of 50 ways they can find the money. This exercise will make you a partner with them and position you as an ally — without dropping your price.
They aren’t the right customer
Finally, there’s a good chance that they simply aren’t the right customer for you. Your job is to make sure that you understand what it is about this particular customer that disqualifies them as a customer and make sure that you aren’t marketing to this group.
How to Eliminate the Discount Conversation
The secret to eliminating the discount conversation is having a deep understanding of your costs; both physical costs, like the cost of materials and soft costs such as your experience and expertise and your customers opportunity costs.
If you don’t understand your costs, and customers ask for a discount, you stand the chance of losing money.
Most small business owners skip this part of the sales and marketing process and the result is devastating.
Your brain is smart, and if you haven’t worked out all of these costs for yourself, how can you expect to present your offer with confidence? You can’t.
Here are the best tips to start with your next sales cycle
Price to allow for a reasonable discount
Pricing is your friend. Not only that, but creating powerful offers that lean into a customer’s desired outcome can eliminate discount requests.
Many business owners set their prices at their absolute lowest level — this leaves you zero room to make customers feel good about getting a discount.
Instead, create a high list price — that’s the highest it will ever be. Then you can create a package deal, or give your sales team the opportunity to offer discounts at a customer’s request without costing you money.
Embrace your expertise
Your customers and clients are looking for the best deal they can get. And your expertise is critical to this conversation.
- An expert gets things done faster
- Working with an expert eliminates risk of failure
- An expert has history, data, and experience to help you avoid the constant trial and error that comes with learning things on your own — and failing.
Your role is to be the expert on the topic of what you’re selling. You are in control.
When you think about it this way, ask you customer or client how familiar they are with the work that you do, and how long it might take them to achieve the results you’re getting right now?
You aren’t confident about the value that you are providing
This is a difficult one to face, but your attitude and how you present your offer has everything to do with how much value your clients perceive.
If you are clear about the value you provide and the transformation and opportunity your offer provides, your customer will see it too.
They don’t know WHY they should choose you
If your customers ask for a discount, they simply don’t know why they should choose you. The benefits you’ve laid out don’t match the benefits they are looking for.
In this case, you may not have asked the right questions to uncover what transformation they want and how your product or service will deliver this transformation.
This is a huge opportunity to understand your customer. End the “sales” conversation, take the offer completely off the table and say something like “It looks like this isn’t a good fit for you. That’s completely fine. Let me ask you this. On a scale of 1-10, 1 being this isn’t the right fit for me and 10 being I want this right now, where are you?” Assuming they say something less than 9, simply ask then “Other than price, what’s missing here that would get you to a 10?” then just listen.
How to Come Up Pricing Models That Allow for Discounts
Here’s the process to understanding all of these costs and come up with your “full price” from which you can meet any discount request .
Outline the tasks
Create a list of all the tasks and elements that are associated with your offer. This can include your qualifications, meetings, visits, support, onboarding — every little thing.
Quantify your costs
Calculate your cost per hour. This is not your hourly rate. This is number is all of your monthly costs divided by your hours you work.
Research the cost of alternatives
Research how much it would cost for you to OUTSOURCE these tasks. This is critical! Even if you are the only person doing the work, you won’t be able to scale if you don’t get help. Make sure you understand how much you would cost to hire this out and still make money.
Research other ways to achieve the result. What alternatives does the customer have: do it themselves (and fail) or have it take longer), hire a competitor, what competitor might they choose, what does the competition offer and how is it the same or different.
Create a list of “priceless” values for each segment of your customer base
“There are some things money can’t buy…for everything else, there’s Mastercard.”
Mastercard’s “priceless” commercials are the best representation of this step. If you haven’t seen them or remember them, Mastercard focused on a variety of customer experience and the “costs” involved, but were actually “priceless”:
Now it’s your turn to list all of those “priceless” elements that you deliver with your offer.
- belonging, love, relationship
Your pricing is all about the ways that you deliver the ideal outcome the fastest and easiest way possible with guaranteed results.
Create packages at a variety of levels
Another powerful way to get the sale while making money is to create packages and offers at a variety of different price points. There’s a chance that your prospect doesn’t have enough experience with your product or service and they want to try before they buy.
Don’t get caught off guard. Instead create smaller, lower-cost packages that make saying “yes” easier. This way, if they don’t want the offer you made, you can easily drop them to a smaller offer without losing money.
What to Say When Your Customer Asks for a Discount
I saved this section for last because you won’t be able to use any of these if you haven’t done the work above.
As soon as someone asks for a discount, that means that they’ve already made the decision that they want this. Now, can they get it for less?
What should you say?
“I could do it for MORE”
The ball is in your court. You see, the original price you stated is a baseline. And, if you have offers at different levels, you can shift the baseline to a higher offer. And when they see how much MORE the higher level offer is, they are more likely to choose the original offer.
There is actually science behind this. It’s called “The Anchoring Effect“, and it’s hard to believe — but true.
People were asked for the last two digits of their social security number. After sharing those last two digits, they were shown a series of products. If the last two digits of their social was higher — the prices they listed for these products was higher. If the last two digits were lower — they estimated a lower price for the products.
The lesson here is to make sure that the prices you share are HIGHER than the price you’re asking for. This is also why so many marketers use the phrase “valued at” and show a higher price that’s marked down. It’s the anchoring effect.
“What would you like to remove from the offer?”
Another way to respond to a discount request is to ask the prospect what they would like to remove from the offer. If you’re a consultant and you have the flexibility to adjust your offers, you can either ask them what they value less and remove it — OR — you can remove different elements to fit their budget.
Never, ever, ever, allow customers to pay less than the list price.
“What’s missing from this that would make this a no-brainer”
If a prospect asks for a discount, then they’ve already decided that they like what you’re offering, BUT, something is either missing or there is too much of something they don’t want. So ask! Answer their question with another question. Don’t say anything else, just let them answer the question. If you can provide what’s missing or make an adjustment – fine. But if you can’t, use this as market research and move on.
“I can offer you a discount if…”
No one likes to say “no” to a customer. And if that’s you, then you’ll like this response. But you have to be prepared for what you could potentially offer a customer who needs a little more than you had in the initial offer.
Look for benefits you can offer that don’t cost you extra time or money but provide value to the customer. This can be holding the price for more than one year, it can include VIP access to content that is easily accessible.
Offer an annual contract
An annual contract is an amazing way to create a win/win situation. It gives the customer what they want (a discount) and it eliminates a major obstacle for you — the surprise loss of a customer.
Do Discounts Right
Offering discounts can be a great way to close a sale and make money, but only if you do it the right way. By creating packages and offers at different price points, you give your prospect an easy way to say “yes”, while still making a profit. If they ask for a discount, don’t get caught off guard – use one of these responses to turn the tables and keep more money in your pocket.