Never Give Discount!
Do your clients often ask for a discount? There is no need for you to give them that. You do need to give them a good explanation about how you arrive at your pricing because clients do not want to pay too much, of course. It is an obstinate misunderstanding to think that clients only want to do business with you if you are willing to give them a discount. There are actually many good reasons to not give discount.
We’ve made this mistake ourselves all too often, and we see many architects and contractors do it as well so here are some tips on how to make your clients choose your company without having to give them a discount.
Do not make clients feel that they are being cheated
A client only needs to indicate that the price is too high and the discount follows immediately: “We can probably do something with this price”. By being ready to drop your price right away, you are actually telling your client: “I had wanted to cheat you. But now I am afraid that is not going to work!” Discount that you give away now, you are also going to lose on all future assignments.
You get what you pay for
The perception of a client is: cheap trade is dear trade. The price that you ask says something about the quality that a client may expect. In other words: whoever charges more than the competition doesn’t have to explain that much. Whoever works very cheaply has to continuously explain to his client that there is no need for him to worry.
Ask for a fair price
Clients are not always aware of what constitutes a fair price. If you indicate that there is no negotiating about your price, then the client can rest assured that he does not unnecessarily pay too much and that your pricing is correct: you explain how you have arrived at this price and everything that is necessary to deliver quality. Be proud of your asking price and stand behind the rates that you work with.
The price is the least important
When a client starts talking about a price, then that is a sign of interest. So, good news. The real decision is seldom based on just the price. Of course, there are clients who will compare 10 alternatives to find the lowest price. But the importance of the price ranks sixth or seventh in many researches. Trust in your work method; quality products and good service are more important.
You will not gain confidence by giving discount
The person who waves the discount wand for the client at the slightest indication, actually tells the client: “We do not consider ourselves very valuable, but we have found a solution for that. We just charge less for our efforts. That way we can get rid of it anyway.” Whoever does not succeed in making clear to his clients what value he or she can deliver, is only left with the option of giving discount. For a client that is not really reassuring.
Do not focus on bargain hunters
The limited group of clients who exclusively are after the lowest possible price, is usually not the most interesting group. Bargain hunters are often very demanding, sometimes almost unreasonably so. They want to squeeze every last drop out of it and it is not easy to satisfy them. The fact that they barely want to pay anything doesn’t mean that they will not have extravagant wishes and demands later. In short, you should leave some clients for your competition too.
Do not give away profits
When a company has a 4-5 percent net profit per year, it belongs to the better earning companies. Whoever gives an unnecessary discount of 4-5 percent, throws the entire yearly profit down the drain. Every euro of discount is a euro of net profit that you would otherwise gain. Sometimes no turnover at all is better than turnover that costs you money. If you do not earn a lot, maybe it is better to have some downtime. That is better than being extremely busy and not make any money at all.
No discount, but exchange
Now what if a client insists on discount, for example because he wants to have the feeling that he gained something? In that case you just offer discount in exchange for something else. Something that is valuable to you. But exchange is different from giving. It feels different too!