Hold your ground: Why valuing your price point is more successful than discounting
We’ve all heard the dreaded sentence: “Is that the best price you can do?”. This is how you move the conversation beyond dollars.
Conversations around budget are like tax time — a necessary evil that all business owners would avoid forever if it was possible. But alas, that’s not the case and both must be dealt with.
We’ve all heard the dreaded sentence “Is that the best price you can do?” and had to navigate our way through an awkward conversation about budget. If my years in business have taught me anything, it’s that being prepared for this question by knowing where you stand is the best thing for you, your business and your clients. In the early stages of my career, this was certainly easier said than done, but as I’ve grown, this piece of advice has become something I rely on.
The ability to negotiate in ways that aren’t harmful to your business is an essential skill. Valuing your price point and holding your ground will always see to more success than discounting ever will.
Why discounting your work does you and your staff a disservice
While discounting your service or product may seem like a good idea to get a client across the line, it’s only a short term fix and I’d argue it’s doing long-term damage. Everyone loves a bargain, but you have to consider what the underlying message is of that. For starters, it implies that the original quote is not an honest one and this compromises current and future trust you have with your clients.
Secondly, discounting almost always creates an unbalanced relationship between the business and the customer, whereby price is always questioned and it becomes an expectation to discount. While some may inflate their costs to buffer in for negotiation, it’s not wise to make this a standard practice. By holding strong on your original quote, you’re conditioning the client to respect your word as final.
What is often an unintended consequence of discounting is the negative impact it can have on your staff. Slashing prices minimises the value and experience of your employees — and of the business generally. It’s important your staff feel valued and giving away their services at a lower rate implies that their value is lesser. Be careful with this.
How to manage conversations around budget with your clients
Conversations around budget can often feel awkward, but it’s important to stand your ground. Know your boundaries and how you’d like to approach the conversation. Often, your clients will have their own budgets they’re trying to meet internally, hence why they’re attempting to negotiate with you.
Prepare yourself for this conversation by knowing how else you can add value to their business. The best way to do this is to approach the term ‘cost’ with an open mind. It’s not always directly linked to money. For example, a project that takes months to launch costs the business time. Offering the client a skill set they don’t have access to saves them time, effort, training, admin as well as money. So if you need to cut ‘costs’, think about the value of time and skills, not just money.
With this in mind, look at the project timeline and see where you can speed things up. If you can deliver something faster than someone else then this is your competitive edge and drives home your financial value.
Next, look at what you can include for the same budget. Is there a service or product you offer that alleviates pain points of the customer at little cost to you? For example, think of a clothing store that offers free next day delivery on orders over $50. It’s alleviating the pain point of lengthy delivery times with very little compromise on the retailer’s end. This same principle can apply across any industry.
How this will see to the future success of your business
Valuing your price point and holding your ground will help your business attract and retain the right clients. And by ‘the right clients’, I mean the ones who respect your team, their skill set and are willing to pay appropriately.
For obvious reasons, having clients who can afford you is good. But having clients who choose you over the competition when perhaps you’re not the cheapest option? Well, that’s invaluable. They’re the ones who will give recommendations, bring in new work and open up new opportunities. That’s when you know you’ve built a relationship — not just a transaction — and that’s incredibly powerful.
Lastly, any business leader can tell you that putting time into building a good culture is time well spent. A happy workplace is a successful workplace and it’s not just the employees that contribute to this, it’s clients too. In my experience, it’s the business leader who sets the tone for how employees are treated by both colleagues and clients. Working with clients who value your work and your employees typically creates an environment where all parties are respected.
Budget negotiation is inevitable and business leaders should equip themselves for the conversation. Know your limits and remember your value. The right clients will find their way to you.
