Should you discount a discount?

How do you deal with customers who ask for a discount? This was the challenge discussed around this month’s Compost Heap in the Business Shed. One of our members, a High Street business which had recently reopened up after the pandemic, was asked to ‘knock a bit off’ their service.

What would your approach be? We discussed a number of strategies, because there are always a number of factors at play in any situation like this. So if you want to arm yourself with an appropriate response the next time you get asked, read on…

Be okay with saying no.

It’s not that ‘no’ should necessarily be your default position, but sometimes we forget that as business owners, we have this luxury. Assess the prospect asking: is it likely to lead to repeat, full-price business? Will they become a raving fan? Or are you likely to have the discount discussion every time they want to use you? Is this potential client someone you want to work with or are your business Spidey senses tingling with ‘pain in the proverbial’ vibes? Be confident to say no if you think it is the right business decision.

Ask why.

In the moment when someone asks for a discount and you are silently grinding your teeth in exasperation, this can get forgotten. Is this person a semi-professional haggler who wants a discount at every opportunity (in which case, activate the trap door), or are there genuine obstacles to a full price purchase? Asking why can help you understand what part of the offer is not working for them which can then open a reasonable discussion about either discounting or eliminating elements of the offer that they do not need or value.

But make sure they understand the value.

Blaggers and chancers aside, people who ask for a discount are generally not convinced of the value. Have you explained the value they will get with your product or service? Do they know that the earrings are designed by a local designer and are handmade? Do they realise that your photo shoot allows them to access all the digital images and get the first canvas print for free? Have you explained that the time they spend with you will give them absolute clarity on how to market their business which will save them time and money in the long run? Explaining the value can shift price perception.

Can you offer them something lower down your range?

Rather than discounting a product or service, is there something you have at a lower price point that will deliver the essentials of what they want? Someone might want you to manage all their social media channels, but can’t afford it – so can you offer to manage just one? Or offer a training session so they can DIY until they have the money to engage you? If you want this person as a customer but their budget is small, be creative about using the budget they have with you wisely – they will love you for it!

Can you both win from this?

If it is a business asking for a discount from your business, there may well be an option for a ‘contra’ or skills swap, so you are exchanging something of comparable value. That IT company needs some headshots and brand photography, you need some IT help… it could be a match made in heaven. Contras can work incredibly well, but go in with your eyes open and commit into writing what each party is agreeing to - they are not without their pitfalls. Alternatively, you may wish to offer a discount in exchange for a testimonial, or prepayment of fee, or anything else that would be of value to you.

Decide if you are a discounter or not.

Some business owners refuse to give discounts, never offer a promotional discount, or give things away for free. Discounting can cheapen your offer and it can work against your brand positioning. If your luxury product is worth £500 but you are happy to charge £300 then was it really that luxurious and worth the £500 in the first place? However, discounts and similar offers can be a fantastic way to overcome first time customer’s purchase anxiety and get people transacting with your business. And once they’re in, back yourself to demonstrate the value you give and so they will keep coming back for more at full price – making that initial discount a great investment.

Take it as a compliment.

However you want to deal with discounts, take a positive from anyone who asks: if they are asking for a discount, at least you know they want what you are selling and so are ‘warmed up’ as a prospect. You can always offer to contact them in the future to see if they are in a better position to buy then.

So, there you go, a few approaches that might help you the next time someone asks for a discount. We hope it helps change your response from a heavy sigh and a forehead on your desk, muttering repeatedly ‘why do I bother?’ (yes, we’ve been there) to being confident in your approach.

And if you are not sure of the value of this blog, I will happily give you 10% off the next one. You’re welcome.