Have you been tempted to offer discounted prices or fees in an attempt to win the business? Have prospects asked for discounts, promising to give you the business if the discounts are granted?
What did you do?
Cutting the price to win the business is a strategy that has the potential to do more harm than good. In the short term, you may win a piece of business, but at what cost? By offering a discount, you “brand” your product or service. What does that brand suggest? The suggestion is that your product or service is not worth the price originally quoted. To make matters worse, the suggestion carries over to future quotes for products or service. Once you establish a precedent, it’s hard to break it.
To compound the matter, discounting your products or services creates a perception of greater value for the products and services of your competitors who don’t discount. How? Your discounted price becomes what the buyer perceives it to be worth. If a competitor has a similar product that they are unwilling to discount then the buyer perceives it as superior. This consistently puts you at a competitive disadvantage because the buyer by default is placing a premium on what the competition is offering while expecting a discount from you.
What clients and prospects really want is value. And you can create value in ways other than discounting. Rather than charge less for what you deliver, deliver more than what you charge for. Bundle in additional relevant services. The impact on the bottom line is likely to be less than out-and-out discounting. And, more importantly, you change the “brand” focus from price to value.