Negotiate Your Prices? The High Cost of Lowering Your Bottom Line
This is a tough question. Some say no, never negotiate your prices, and I was once told by a woman never to discount your prices because clients will never see the value of your
I agree wholeheartedly with her, but that was before we had this huge economic problem. If you are really tight on cash and the sale could mean the difference between your cell phone is on or off this month, then YES, offer a one-time discount, but to ensure that you can go back up on your prices later, you might want to embellish your situation a bit by using the following excuses:
1. I just had a client cancel at the last minute, and I have this inventory I have to move. I’ll give it to you at a 25% discount.
2. I have extra inventory this month. I can give you a 25% discount if you can pay within 3 days.
3. We’re having a special this month for our regular clients (or new clients) 25% off the first purchase.
4. If I’m late on my mortgage again, the bank is going to foreclose. PLEASE buy some products from me! (OK, I’m kidding on that one, but it’s not like many of us have not been there as Entrepreneurs)
You MUST make it a win/win situation. Never make it totally to their advantage or totally to yours.
When you offer a discount, there are several things to consider:
- The client may never respect his old price again and may be offended if you go back up
- Word may get out that you are giving major discounts, and new potential clients may already have a price point that they will pay for your services before you call.
- Do you really want to be known as the service that’s “Cheap” or just lower your standard prices all around and be known as “Economical”
- Do you respect what you do and how hard you work less than you do your earnings?
- Will you be able to make a living and pay employee(s) if you lower your prices permanently?
- How many other people do what you do who could compete with your clients for business?
- Who are you approaching to do business with you… Corporations or everyday Joes and Janes?
- Are you underselling your services in the first place?
- How is your business self-esteem
- Could you establish more higher-end clients?
These are very tough questions to answer, but once again, we are in a recession, and few people can turn businesses down.
It all depends on where you are financially and if you can afford the loss. There is nothing worse than turning down a deal cause it doesn’t pay enough and then, 2 weeks later, practically begging that same client to change his or her mind.