Three Tips For Handling Discounts

At a Bosworth sales training in 2003, I was tasked with closing a deal without being able to provide a discount.  

I found this to be unrealistic.  A “no discounts” policy might work for a large, mature company with a unique product.  Or a company with such thin margins that any discount would materially affect the bottom line.  

But with many software or technology products, especially early-stage, margins are quite high, there are many competitors, and companies are fighting for market share, not for profitability.  There are also verticals (education, nonprofit) that are accustomed to discounts.  And some buyers are judged on their ability to reduce the price (particularly in certain markets outside the USA).

Here are three suggestions:  

1) Don’t Begin With A Discount.  Quote your price, proudly.  Explain why your solution is worth every penny.  Don’t lead with this:  “It’s $50/month but we can give you a discount.”

2) Reschedule The Discount Discussion:  When you are asked for a discount, take your time.  If you are early in the sales cycle, an appropriate response is something like, “I’d be willing to consider it after you’ve decided to select X as your solution.”   This is also a way to qualify the truly interested from the window shoppers.

3) Get Something In Return:  Never provide a discount of any kind without getting something in exchange.  Ask for their participation in a case study; a testimonial for use on your website; a statement in a press release; a referral to three colleagues; a multi-year commitment; or anything that would have value to your company.