Never Offer Discounts as a Consultant

Why Discounting is Bad for Business

It Lowers the Perceived Value of Your Product or Service

When a customer receives a discount, the perceived value of your offering decreases. There's a saying that something is only worth what someone is willing to pay for it. If the price drops, the perceived and actual value of your product can only align with the discounted price. This change in perception can harm your long-term relationship with the customer.

It Sets Expectations for Future Discounts

Once you offer a discount, the customer may expect similar deals in the future. This can be problematic not just with the same customer but also with others in your industry who hear about your discounting practices. As a result, people may become unwilling to pay full price, as your earlier discounts have set a lower benchmark for perceived value, eroding your future opportunities to maintain healthy margins.

It Complicates Business Operations

Offering discounts to some customers and not others can lead to inconsistencies in pricing for the same service or product. Managing different price points for different customers can create internal confusion and administrative challenges, especially for larger companies with broad customer bases. This inconsistency can ultimately lead to inefficiencies in your business operations.

It Signals a Lack of Confidence and Diminishes Trust

Discounting can give the impression that you don't fully believe in your own value proposition. If you’re willing to sell your product for less, customers may wonder if the solution is as good as you claim or if they can trust you as a provider. This lack of confidence can erode trust, making customers second-guess both the product and you as a business partner.

It Reduces Your Profit Margin

Every time you sell at a discount, you’re reducing your profit margin. To compensate, you'll need to work harder to close more deals at higher prices. This can lead to a cycle where you're constantly chasing more sales just to make up for lost profits, ultimately putting more pressure on your business.

It Tempts You to Cut Corners

Discounting can force you to find ways to cut costs to maintain profitability. While operating efficiently is important, the pressure to lower costs may lead you to cut corners in ways that reduce the quality of your product or service, further harming your brand and perceived value.

Better Alternatives to Discounting

Emphasize Value

Rather than lowering your price, focus on clearly communicating the value of your product or service. If customers see the return on investment and understand the benefits, they will be more willing to pay the quoted price. Answer their questions and address objections confidently. Instead of lowering the price to match perceived value, raise the perceived value to justify the price. This way, your customers feel they are getting what they paid for, and you maintain both your pricing integrity and profit margin.

Modify the Solution to Fit the Budget

If budget constraints prevent the customer from agreeing to your price, consider eliminating non-essential components from your offering. For example, if your standard solution includes services the customer doesn’t need, you can remove those elements to reduce the price while maintaining your pricing structure. Just ensure that the customer agrees to the modified solution and understands the changes.

Be Willing to Walk Away

Saying "no" to a deal is sometimes the best decision. It allows both you and the prospect to find a better fit elsewhere, avoiding a bad professional relationship that could cause future headaches. Walking away can help you avoid compromising your values and standards for short-term gains.

Bottom Line

While it's natural for customers to seek the best deal, discounting can create significant issues for businesses, including lower profit margins, reduced customer satisfaction, and a damaged reputation. Instead of discounting, focus on effectively communicating the value of your offering, adjusting your solution to fit the customer’s budget, or walking away from unprofitable deals. These strategies will help you protect your business in the long term.