Three Key Strategies For Handling Price Negotiations For Your Consulting Services
Has a prospect for your consulting services ever said to you, “Your price is too high and I’d like a discount"? In this article I outline three key strategies for responding to this. One of these strategies even has the potential for you to make a larger sale of your consulting services than you originally anticipated. Curious?
First, giving discounts in the right way may well be the most appropriate thing to do. Conversely, giving a discount in the wrong way can not only lose you consulting business but could lose you all possible future consulting business from a potential client. Read on to see what I mean.
Just suppose you say “yes” and immediately give a discount. What do you think this prospect now thinks?
- You seem desperate for the sale.
- I wonder how far you will lower your price. Mmmm, maybe I should have asked for an even bigger discount.
- The price you originally offered was not the real price. Are you trying to trick me? Can I really trust you?
- You don’t set a very high value on your own consulting services if you are prepared to discount so quickly.
- You agree your price is too high. This is a problem.
- Next time I come to buy anything from you, I’ll ask for a discount again - an even bigger one.
Also, by giving a discount you have trained your client to expect a discount in all future dealings with you. Why wouldn’t they?
And just because you've agreed to a discount doesn't mean you'll get the consulting business, in fact, quite the opposite. You may have damaged your credibility to the extent this person no longer trusts you or wants to do business with you.
So what do you say when someone asks for a discount?
When someone asks for a discount, just reflect back and ask, “Why do you want a discount?” Listen very carefully to the response they give you. That will help you understand what is behind their request as you need to know whether money really is the issue or not before you can respond.
When you respond, take the focus away from discounting to changing the value. Have a value discussion by using one of the following three strategies.
Strategy One
This strategy is to be used when money really is the issue. Instead of giving a discount, you lower your price by taking out something of high perceived value. This is a win/win choice. They get the lower price and you still maintain your price for a certain value bundle.
“If price is an issue for you, then I suggest that we take out this particular aspect of my consulting services.”
“If price is an issue for you, then I suggest that we take something out. What do you suggest?”
You really want to train your prospects and clients that, in order to get a discount, they have to give up something of value. They need to understand that there’s a price for reducing the price.
Strategy Two
With this strategy you maintain your price. You effectively say “If you agree to my price, then I will add in.............” The product or service that you add in needs to have a high perceived value by them and be a low cost item for you. Then it is a win/win.
“If you agree to my price of $20,000 for my consulting services, then I will also include a report I wrote on ………….”
What are some high perceived value (low cost to you) products/services you could include in your offers?
Strategy Three
With this strategy you reduce your price in exchange for a larger sale. You effectively say “If you give me a larger commitment/sale, then I will give you a reduced price.” That’s a win/win.
“If you commit to 1000 hours of computer consulting, then I’ll reduce my rate from $250 to $200 an hour.”
What are some financial commitments your prospects/clients could give you in exchange for a reduced price?
I hope you're starting to see that when people ask for a discount, it creates a great opportunity for you. Next time you are asked for a discount, and money is not really the issue, try increasing the total value of your sale.
In fact go one step further. Be proactive. Don’t even wait for your prospects/ clients to ask for a discount and approach them with your own “If…then” offer to increase the value of the sale. You will be surprised at how easy it can be to get larger sales of your consulting services with minimal extra effort!