Myth: It’s Okay to Cave On Random Discounts if it Gets More Clients
THIS IS THE DEADLIEST MISTAKE I SEE SMALL BUSINESS OWNERS MAKE!
They get clients and prospects who come to them and say, “Hey, I really like your business, and I want to sign up/keep working with you, but I don’t think I can afford your current prices. Can I get a discount?”
And then the owner CAVES! They give that person a discount!
Now some of you may say, “What’s the big deal? They got a new client and the client got a discount. Isn’t that win-win?”
No, it isn’t.
The kinds of clients who nickel and dime you for lower prices don’t make for good long-term clients. Paradoxically, they are the people who complain mostly loudly about minor issues, and they try to suck up the most of your time by looking for special treatment.
Worse, they create the perception in your community that you’re a pushover and you don’t really know what your business is worth. In the long run, they make it tougher for you to sell people on your real prices because everyone goes in thinking they’ll get a discount!
Fact: All Pricing Decisions, Including Discounts, Should be Part of a Strategy
Some people may argue here that giving out random discounts to people who beg is no different from offering LBOs or from giving out special discounts to influencers.
It’s completely different. It all comes down to managing expectations and strategy.
LBOs have a very specific purpose: they are designed to give prospects a taste of your business and make them feel like they are a proper client already, so it will be a no-brainer when you offer them the chance to continue.
Plus, when you offer someone a discount upfront with the opportunity to continue at full price later, it projects confidence and generosity.
When you sell your full price first, THEN discount it later, it projects desperation.
As you might imagine, confidence and generosity are much more attractive and bring in more clients.
And of course, you can always give out discounts as a simple act of generosity…but make sure the person on the other end really deserves it, and don’t make a habit it out of it.
Finally, it makes plenty of sense to offer discounts to people who can add extra value to your business, such as community influencers or business affiliates. That’s just good strategy.
Myth: Price Erosion is an Outside Force that You Can’t Control
Completely wrong. In fact, I think the only time when price erosion can really hurt you is when you allow it to infect your business.
Sure, you can sit there and make excuses. You blame it on other businesses in your area lowering their prices, or on the economy, or on clients who don’t take your products/services seriously…
But at the end of the day, YOU are the only person who controls your prices, and when you set them too low, or don’t build enough value to justify them, you have nobody to blame but yourself.
Fact: When You Dominate Your Market, Your Prices Become Invincible
The truth is, the only way to get the high prices you want and need to run a thriving business is to become the go-to expert in your community.
In other words, DOMINATE YOUR MARKET!
Offer the best products or services, CONSTANTLY over-deliver on client expectations, and create a community of clients that you treat like the most special people on Earth.
The goal is not to make the market think your prices are “fair.” The goal is to make the market embarrassed for not paying you more, since you’re already giving them such incredible value.
Because when you really are the best at what you do in your community, your client base isn’t going to consider you an optional item in their budget. In the toughest economic times, they’re going to look over their budget and find ways to trim everything BUT you.
Committed to your success,