Haggling for a lower price is so common that it could even get very challenging to tell the truth from the usual bargain.
However, it should rarely be the problem of the salesman, business owner, or entrepreneur. Most of the time, it is the prospect’s problem.
In this article, we are going to discuss the reasons why you should not ask for discounts as a customer and how you should handle price negotiations as a company.
The graph above by HubSpot shows that there is a dramatic disconnect between the needs of the customers and what most sales reps tend to plan during the first interaction as shown in the graph below.
It is a fact that pricing is always one of the main considerations in making a purchase.
But when I talk to people who are trying to buy services and negotiate fees, I try to tell them every time not to ask for a discount.
If you cannot afford it, find someone else who is offering a similar service at a lower rate that is completely feasible as long as they are actually presenting the same type of pricing and the same type of service as a result.
Reasons Why You Should Not Ask for Discounts
You may ask for vouchers or coupon codes for Thanksgiving, or pay annually so that you can get two months free—those are completely legitimate offers.
Whenever I talk about discounts, I am referring to the types of deals that you are trying to get from paying someone who offers services, whether digitally or not, at a significantly lower rate.
There are a couple of other scenarios where discounts may be acceptable.
- Some companies may have built-in discounts that they offer upfront. On the website, it may be priced at $200 per hour, but pretty much almost everyone can sign up for $150 per hour (as an example).
- Also, there are certain cultures and countries that are extremely used to negotiations. In that sense, it may also be reasonable to actually negotiate there simply because it is part of the culture.
Asking for discounts often means that you are trying to discard their rates.
But aside from that, it is not advisable for customers or clients to ask for discounts especially when it comes to service offerings.
Here are some of the reasons why asking for discounts is a practice you must avoid as a client or customer.
You Want to Ensure Quality
If you want to get some services provided to you or presented to you, you want to get the best out of those services—this is assuming that you are not going for the lowest price possible, meaning it is not the race to the bottom and you just need something done and you are willing to buy it off of AliExpress, or outsource to the cheapest destination possible.
You want to pay the right amount of money, and expect the right type of quality in return.
So, this is something that you can command. It is within your power to demand great quality and nothing less. And if, even with certain expectations, rules and regulations, you still go all in for the full price, then you can expect great treatment.
You Want to Avoid Compromises
Another problem with asking for discounts on services is that it may lead to compromises.
If you try to get a service, and say, “Okay, I want the same service but I want it to be cheaper, and I probably want something else”, then, you will most likely end up with compromises.
I am not saying that compromises are bad per se. The problem with compromise is that if you work with companies, or even with freelancers that have multiple clients, there are going to be customers paying the full price. There are going to be ideal customers who simply fit the culture better.
The closer you get to the original requirements of the business, the better customer you will be for that specific business.
Your vendor is going to go above and beyond for your needs and they are going to execute faster, spend more time, and make sure that they retain you in the long run as the important customer that you are.
Otherwise, if you keep asking for discounts, if you try to cut down their rates, you are going to get deprioritized which leads me to the next reason why you want to avoid asking for discounts.
You Want to Avoid Getting Deprioritized
Asking for discounts could get you deprioritized. It is as simple as that.
Because again, the company has already set some form of standards, and that is what pricing is actually based on.
Put your feet on the shoes of the company. You offer the same service to 5 clients. The three of them ask for discounts and insist on having them while the other two are paying the full price with no questions asked.
Assuming the working relationship is relatively the same, how would you rank them, priority-wise?
This is why you shouldn’t ask for discounts.
Discounts are acceptable in several cases but otherwise may backfire. Looking for a top-notch quality always comes at a price.
You Have to Consider the Actual Costs
The pricing of a specific project, building a house or a marketing campaign normally entails a lot of things.
There is already a price bundled in, and within this price, there are office expenses, legal and accounting fees, salaries, the percentage for management, and buffer for rainy days.
Part of the money that goes into fixed-fee projects also goes into all sorts of unexpected events, such as all types of scope creep that the company has enforced on themselves since this is something that inevitably happens.
You Want to Keep Motivating People
If you are a marketing company and you are presenting a marketing strategy, you know the steps you need to take but sometimes, you are going to hit a roadblock.
Sometimes, this specific client may not have competitors, and you need to figure out who your competitors are, or you may have to speak to customers and dig deeper into international markets, into other forms of industries, and make some deductions. These are some initiatives that, by default, are not really bundled into the original marketing campaign offer.
The same goes for web development, creative services, advertising services, and everything that is not completely straightforward and to the point, may have some surprises, and those are bundled into the original price.
So, when customers ask for lower fees and rates but still expect the same service quality, the possibility of getting deprioritized exists. Other companies would then resort to upselling or worse, looking for clients who are more fit.
Do not get me wrong. Again, you do not have to overpay or miss out on holiday deals and promotional offers, especially for products. With products, the pricing model goes with scale, so shops need as many sales as possible, and this is something that is already expected. If you can leverage it, then it is good for you.
I am talking about services here because services are completely connected to salaries, and entirely related to time, effort, and resources. Because of all of those activities, marketing strategies, designs, development, accounting, and legal, they are contingent on people spending the time on doing something custom-tailored for you.
This means that people have to be excited about what they do, and need to be hyped about the type of work they do, or even if they are not, they need to be paid well and treated well by the vendor that is paying those specific people doing this.
These people want to reduce stress, undesirable surprises, late-night calling, and a bunch of other things that are generally scaring people off and wasting a lot of time for the vendor, which is not necessarily a great thing, especially in the long run.
So again, as a result, avoid discounts unless you fall into one of those categories that I mentioned earlier.
You Want to Have Greater Control Over the Process
Always try to pay the full price. Paying full price means that you are a respectable client, and you are going to be a customer that vendors are going to love working with. If you are paying the full price, you are complying with all of the requirements, and you can control the future of the project.
If there are any delays, problems with the contract, or any concerns, you can always call them and say:
“Hey, I have done and given pretty much everything that you told and asked of me—the terms, the duration of the deal, the price, and everything else. What I expect from you is complete accuracy and attention to detail. I am not going to try to cut off your margins or anything like that, but I want to give you all the freedom so that you can actually focus on my project 100%, and deliver everything that is expected.”
Having this conversation actually gives you the power to control the environment, and the ability to become one of the most important clients for the company as you command the right type of quality.
At the end of the day, this is a great deal for both parties because getting the attention to detail, the right type of quality, and the right people to look into your deal means that you are going to get a much higher return on your initial investment.
So, there it goes—skip discounts whenever possible, pay the full price, and take advantage of the terms of the contract whenever you comply 100%.
Tips for Handling Price Negotiations
Indeed, price negotiations could be extremely exhausting — but they shouldn’t be.
Invoking emotions is among the top 10 rules in marketing. Sales is no different.
It works sometimes, and looking for the best deal possible is common business sense.
Optimize Your Sales Prospecting Process
Negotiations are so common in certain parts of the world that it is considered an insult if you do not fight over the cost for a certain period of time or jump back and forth between multiple packaged offers.
If your own pricing model predicts negotiations every single time, design a process that helps you walk your prospects through a familiar journey.
If you are just starting out as a business or freelancer and your portfolio is non-existent, you may consider cutting some discounts for starters until you make a name.
Know Your Value
In every other case, know your value and business model.
The best you can do is to cut a long-term deal. Try offering a two-year contract with a discounted price or paying upfront for a few months for subscription-based services.
It is better than nothing!
Otherwise, the customer does not value your service or they are not your target market.
Understand Your Target Market
One of the common freelance myths is:
“Give me a solid discount/Do this one for free and I’ll bring you a ton of leads!”
This trick has been beaten to death and there is probably not a single freelancer who has ever received a quality lead after doing this favor.
In terms of service providers, there are the ones who are:
- just starting (little to no experience)
- having some experience
- the high-end players
On the other side of the table, we have a similar distribution of users:
- people who do not “need” a service or cannot utilize it effectively
- those who may generate some results
- people who can revolutionize their business with the highest plan
Vendors should be acquainted with their target market and buyer persona and therefore, be aware of what they can bring to the table and how saleable they are.
If you are just starting and do not have any portfolio or experience, you will likely have to spend some time working for a low fee in order to get traction.
Once you get there, match your expertise with the expectations of the second tier customers. Your work and solutions have to match the expectations of the larger players.
Some vendors manage to take it to the pro league. This requires the highest level of expertise, professionalism, and industry experience. None of the other categories of service providers can compete here. But, you still need to prove yourself and land a couple of big whales, produce massive results and get the five-star reviews in place.
With that in mind, bringing prices down usually has no merit if you are experienced enough and have a steady flow of clients. If that is not the case, consider whether you are proficient enough and have your marketing process in place.
Moving upstream should be your goal as a service provider and that comes with continuous learning and a lot of practical experience as well.
Remember: bargaining is almost mandatory in many parts of the world. Be prepared for it.
How do you handle those who haggle with your pricing? Aside from pricing, what is the #1 quality you look for in a client?