“I’ll Always Negotiate With Someone Who Has a Pen in Their Hand.”
I hear debate when it comes to discounting. Some people talk about it freely and early and some like to announce a hard line, ie. “we don’t discount, etc.” Like most sales principles, alot of it depends on some variables. Your market, your product moat, your client, conditions, the fit for the purpose; all of these and more are conditions where discounting or lack of can make sense. Most of us are in competitive industries where discounting is prevalent and yes, it works. However, you need to be careful when you do it as it’s a vehicle that is easily misused and can backfire, reducing the perceived value of your offering.
The easiest principle to remember: I’ll always negotiate with someone who has a pen in their hand.
Here’s how discounting goes wrong. You’re in a demo with a lower level individual just gathering information to take to a deicsion maker. They ask about price. You throw out your number and then a “softener,” ie. “but we can be flexible there, we could probably get it down to more like X.” You’ve now just given up your leverage just to stay in the game…and you’re probably wondering now why you haven’t heard from them (they now know what they need to know).
I’ve had over 1500 Zoom meetings for competitive SaaS offerings and here are a few rules that have proved successful through trial, test, error and success.
Never offer a discount without the decision maker being involved: Otherwise you’ll be discounting twice.
Never discount until you know you are the vendor of choice: first they need to decide yours is the product they want, until we get there, a discount is a moot point.
Always get something in return: Usually this is in exchange for a swift commitment. A discount with nothing coming the other way isn’t a negotiation, it’s just giving away margin.
Give it a deadline: Not: “let me think it over and circle back next month.” If that’s where they are, it’s not time for the discount discussion yet. This is off the menu pricing. It exists because they’re ready to move now, not because it’s a standing offer they can cash in whenever. Leave it open indefinitely and you haven’t given a discount, you’ve just created your new price.
Discounting isn’t a bad thing…but the client needs to walk into it. You’re not discounting to be liked. You’re discounting because they gave you something worth trading for. That’s the whole difference between a real negotiation and just being generous with somebody else’s margin.