(My column as it appeared in Upmarket magazine week of June 10th)
Many business owners are ready to offer a discount even before they’re asked. They’ll give a price, and in nearly the same breath: “If the price is too high, I can offer a discount.”
The moment a discount in pricing is introduced the buyer will immediately seize the opportunity — just as a shark senses prey in the water. Now it’s just a matter of how much of a discount can be obtained, with the buyers ultimate goal of getting most, if not all, for free.
People believe that they get what they pay for. But the other side of that coin is this: People love to get a discount, and they hate to give up value in order to get it. Your only true defense against discounting your wares into oblivion is to offer different levels of value at different price points and let the buyer decide.
Let’s say you’re in the carpet cleaning business. Your competition charges $100 dollars to clean a living room carpet of 800 square feet, and your potential customer knows this. How will you make your pitch without having to offer a discount?
Easy: Offer options with different levels of value. Here’s an example…
- $80.00 – Clean one carpet area up to 650 sq. ft. and include a coupon worth 10% off any service on the next appointment.
- $110.00 – Clean one carpet area up to 800 sq. ft., and include a wiping of the rooms floor moldings, and a complimentary front door mat.
- $250.00 – Clean three carpets or an area up 2000 sq. ft., and include floor moldings, front door mat, and a dusting of crown moldings of same rooms.
When the customer looks for a discount on your services to match or beat your competitor’s price, you can show them the added value in your list of options — and instead of being able to compare your offerings directly to your competitor’s offerings, they’ll be able to focus their attention on what level of value they’d really like to take advantage of.
Don’t offer to discount your services to match someone else’s; you’ll just be in a race to the bottom. Trying to be the cheapest option doesn’t last, because someone will always try to provide the same service more cheaply. But if you give the client the option of saving money by giving up value, it’s worth your time to sell your service. Anything less, and you’re not selling — you’re just in the game to lose money.
This formulation applies to nearly every kind of business, whether it be accounting, consulting, coaching, home building, lawyer, doctors and more. If you’re trying to find one that doesn’t or thinking yours is the exception, then you’re more comfortable selling by discount — not actually selling.
If you’ve ever been at a jewelry counter with your significant other to buy a special piece, do you remember the sale? “Well if you can’t afford this piece, you can always go with this piece…” Not a discount, but an alternate option. Do you see how powerful a technique this can be?
Anyone can sell by discount — and usually they do — but they don’t last long.
© 2012 Mark St.Cyr