negotiate-discount

6 Ways to Negotiate Discounts with Customers

At some point, every salesperson hears the dreaded question: “Can we have a discount?”

Although it can be tempting to say yes, it could set a bad precedent. In the long run, competing on price can destroy your brand. Word that you offer discounts will get around, and you become known as the company that gives 20% off rather than the company that offers a uniquely valuable solution.

Instead of giving into a discount request, maintain control over the conversation by using one of these tactics:

1) Ask the prospect why price is an issue

It’s usually unwise to say “no” to a discount request right away. By asking the prospect why they want a discount, you can gather critical information that will shape the rest of your strategy.

Some prospects ask for a discount as part of a standard negotiating strategy. In those situations, the prospect may struggle to articulate a specific answer to the question. You need to make it clear to the prospect that you don’t lower the price without getting something in return.

Alternatively, a prospect might frankly acknowledge that they cannot afford your product at the quoted price. If you sense that there really is no wiggle room, then consider offering them a reduced services package at a price point they can afford. If you still aren’t making progress, you need to seriously consider the possibility that the prospect just isn’t a fit right now.

Other prospects may indicate that they have received a quote for a lower price from a competitor. Now you need to work to demonstrate why your product offers superior value. Try to gauge whether the prospect is a price-first buyer. A prospect who just wants the lowest price might not be worth pursuing.

2) Shift the conversation from price to value

Acknowledge the prospect’s request, but then move the conversation away from price. Say, “I understand that you are concerned about the budget, and I get that. Let’s talk some more about what our solution can do for you.”

In pitching your solution to a price-conscious prospect, you should emphasize ROI and other bottom-line benefits to your solution. Show them case studies and other marketing materials that prove your value. Justify your higher price by saying, “I understand that Competitor A offers a lower price. However, their product does not offer x, y, and z features that provide more value to customers.” Back up your claims with facts and stories from happy customers. If you have a story of a customer who switched to your product and received more value, that can be incredibly powerful.

3) Offer to provide additional services for the proposed price

Some customers will not budge on price. In some cases, it’s worth trying to sweeten the deal for them. Try throwing in a few extras to see if that might pique their interest. While you don’t want to give away too much in the deal, giving a few extra perks can show the prospect you’re flexible while avoiding a massive discount.

4) Agree to a deal with different terms

If a prospect really can’t exceed a certain budget, trying to talk them into it may be a futile effort. In this case, it’s helpful to alter the terms of the deal so that it’s more amenable to them. Try reducing the scope of services to see if a smaller order would work for them. 

By changing the terms of the deal, you can differentiate between prospects who are serious about partnering with you and those that are just hunting for a discount.

5) Ask the prospect if they would prefer a month-to-month contract to start

When other tactics fail, it can be helpful to offer the prospect a month-to-month contract. Many prospects may feel uncomfortable committing to an annual contract, and a monthly contract—even at a higher rate—can feel safer.

Offering a month-to-month contract reveals strong confidence in your product, and gives you an opportunity to directly prove your value. If the prospect is a good fit for your solution, this can be a good option to close a deal. Then, you need to make sure they have a great customer experience.

6) Agree to a discount only if the customer gives something in return

If the prospect seems serious but unable to commit to your price for any reason, it can sometimes be worthwhile to agree to a discount—if and only if you are receiving an obvious benefit in return. 

There are numerous possibilities: a large down payment, a longer contract, and a commitment to serving as the basis for a case study. The concession should be significant enough to be worth the discount and demonstrate the customer’s commitment to the deal. Describe the terms in writing, if not the contract itself.

What to do when facing the worst-case scenario

Of course, it’s very possible for you to do all of the above and the prospect still won’t agree to a deal. In these circumstances, it is better to walk away from the deal rather than acquiesce to a discount. Agreeing to a discount demonstrates that your product isn’t worth your asking price and starts off the customer relationship on unfavorable terms.

Leave the door open for the customer to come back to the table. Tell them, “if your budget changes, I’m always happy to talk.” But make it clear that a discount isn’t in the cards unless the prospect can concede something, too.

Some prospects may return to you after scouting out other options. Even if the prospect never comes back, however, you still made the right move. By not discounting the product, you avoid the problems of discounting and doing business with a non-ideal prospect.

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James Meincke

Director of Marketing @ CloserIQ. Previously Recruiter @ ManpowerGroup & Freelance Social Media Strategist. University of Wisconsin Journalism & Strategic Communication Grad.