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.

Handling the pricing objection

Handling communications from prospects on pricing is one of the hardest tasks for a salesperson, particularly where it begins with “your price is too high.”

Let’s look at a real situation --- an email reply from a prospect --- very early in the sales cycle:

“We think the Davinator is a pretty great tool.  But for it to be useful for us we must have the premium package and we think your current premium packages are quite expensive for our budget. For that reason we will hold off on using Davinator until further notice.”

In this scenario, you are a salesperson at a company that is struggling and needs every bit of revenue it can get.

What’s your best next step?

a) email offering a 5% discount

b) email and offer a 25% discount

c) email and tell her why the premium package is worth it

d) ask your manager if you can offer a discount

The answer is:  e) none of the above.

The goal here is to get this person on the phone.  Price should never be “discussed” in an email.  It’s an emotional issue for buyers and needs to be handled in a medium where you can have a real-time discussion involving pricing, needs, benefits and more.  If you can get them to meet in person, even better (if the price justifies the time/expense of the meeting).

So here’s your best next step:  reply back and indicate that you’d be glad to speak with her about a possible discount if she would have ten minutes next X-day at Y-time.  If she is truly interested in your product, and really wants a discount, she’ll agree to the call.  

How to handle that phone conversation?  Stay tuned....