So you’re thinking about offering a discount. Maybe sales are slow or you think a big client might balk at the pricing structure. Whatever the reason, you’re here because you’re considering taking a chunk out of your deal to close it.
Please, don’t.
Discounting feels like a quick fix, but when you start throwing around X% off, you’re telling everyone that your product isn’t worth what you’ve been charging. If you’re scared a prospect is going to walk because of price, it’s not a pricing problem, it’s a value problem.
Value-Price Connection
Value and price move together. It’s a really simple equation.
Higher perceived value = higher acceptable price tolerance
Lower perceived value = lower price tolerance
If a customer believes the value of what you’re selling is worth the price tag, they’ll pay it. Think of a parent buying a car for a newly licensed 16 year old. Would pay a higher price for a top end stereo system or for the most advanced safety features? They’re worried about their child, safety is the top priority, I’ll bet they’d be willing to spend up to keep their kid safe before they worry about the stereo.
Standing your ground on price
Way back, I had started a new job as the head of sales for a telecom company. Barely had my ass hit the chair when I was thrown into the fire. A big contract was up for renewal and my new team insisted we need to cut the price to keep them.
I wasn’t convinced.
I pushed the team to explain why or where our value had been eroded. They said it hadn’t. I then asked where the customer could go to get the same level of service at the same value. They couldn’t tell me. To be fair, they did say the customer could do it themselves and probably would if we didn’t bring the price down. I was not convinced.
After several rounds of debate and discussion, I tell the team they can’t provide a discount. As I saw things, the value we were providing to the customer was worth every penny we were charging.
My team, and in particular, one person on the team told me I was wrong and that we were going to lose the customer and they were going to leave us if we didn’t offer them lower pricing.
They were so adamant, that they tried to convince me that if we sent them the same pricing from the current contract, the customer would walk away and we wouldn’t even have a chance to engage with them. They said it would be over immediately and we’d have no chance to save it. This is when I knew my team had lost control and were afraid.
Pricing Fears
A couple years ago I was working with a client. One of the sellers was about to send pricing to a prospect. This particular deal would be the biggest of the seller’s career. He and the CEO were debating prices and the seller wanted to offer a 40% discount. He was convinced without that cut, the prospect would walk.
I pushed him: “why do you think they’ll just walk away?” His response? “I’ve just got a feeling.”
Right there, I knew what was going on. This guy hadn’t sold the customer. He’d been nothing more than a glorified order taker and now he was about to pay the price.
After some back and forth, we let him offer a discount of 10%, nothing more. There was no way in hell I was going to give him permission to discount 40% based on his gut.
He fought back, he was convinced he was going to lose this sale and never hear from the prospect again. So, I laid it out for him:
“If your pricing scares them off to the point where they won’t even engage with you, then you haven’t sold them a thing and they were never a real prospect.”
In the end, he sent the pricing without the crazy discount, the prospect did respond, they asked some legitimate questions, and they moved forward.
Your Gut’s Not Saying Discount. It’s Saying Sell Better
If you’re afraid of the pricing you’re about to deliver, that’s the little voice inside your head telling you that you’re missing something. The customer doesn’t see the value. It’s not telling you to cut prices, it’s telling you that you sold it wrong.
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