Clients ask for discount? Understand WHY they want it!

Clients ask for discount? Understand WHY they want it!
client discount

You know how does it feel. Right when you are about to close the sale, the customer asks the dreaded question: “Can I get a discount?”. In those moments, even the most experienced salesperson start sweating, not knowing what to say. Besides reducing the margin, in fact, the risk is to undervalue the product/service at the customer’s perception.

Yet, when you go shopping at the supermarket, you would never ask the cashier: “Look, the total spending is a bit high, could I get a discount please?“. On the contrary, you pay the price you are asked for without blinking. The same thing happens when you go to buy clothes, items for your house and so on.

A simple answer: “Why?”

But when it comes to products that are perceived as “discountable”, such as consultancy services, software and products for business, customers feel entitled to demand a discount. Although the prices are stated clearly in the pricing list, or the quote you sent them is fully detailed, your customers think there is a potentially reducible margin, or that the price you are asking for is too high.

How to defend yourself? A very effective strategy is to turn the question back to the customer.

Customer: “Can I get a discount?”
Seller: “Why? Is there a specific reason why you want a discount?”

This simple technique has many advantages. First of all, the majority of customers who are really willing to buy will quickly back down: “Nothing, I was just wondering.” and they will proceed with the agreed price.

Other customers, however, will offer you interesting feedback on your pricing list and, in some cases, even ideas about why they actually deserve a discount. Indeed, someone could offer you a pretty valid reason! Let’s see some possible answers and how to deal with them properly.

Bad reasons for a discount

1. “Because we are an important customer. You’ll be able to add our logo to your website!”

Some customers feel so important that they are doing a favor to you in purchasing your products/services. Well, try to tell the cashier of the above supermarket: “If you sell me the food half price, I will bring your supermarket bag around with me and everyone will know that I bought from you. I’m a very important person!” Of course it would not work! So this reason can not be accepted as valid. On the contrary, you can reply to the customers that if they bring you a reference in the future, then they will get a discount on their next purchase, or on the next month fee in case of subscription-based services.

2. “Because the budget is too high. You’re service is more costly than what we are willing to spend”.

Another bad objection is the lack of available budget. Again, if a shirt costs more than what you are willing to spend, you would never ask the clerk for a discount, but you would go to another store! You can explain your customer that there is a reason behind your pricing and you are happy to refer another specialist that charges less (for a lower quality). Don’t worry, most customers will be too proud to accept a lower quality, and they will proceed with the purchase. The ones who will actually turn to the cheaper alternative… well, they would have never purchased from you at all!

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Good reasons for discounts

Not all customers answers are bad. Let’s see some examples when the discount plea is legitimate.

3. “I’m a faithful customer.  It’s the third time I buy from you!”.

Loyal customers are to be rewarded, since their total value in time is very high. To encourage them to continue to buy from you, you can offer them a “loyalty discount”, which can be applied to the current purchase or to the next one. Similarly, if the customer buys large quantities, you can apply the same principle: indeed, if they sign a contract for a large number of licenses of a software or for a supply of considerable size, they are more than entitled to request a further discount than the one already applied from the list price!

4. “Because with us the logistic costs are reduced.”

There could be situations in which the customers make your life easier. For example, they could be located very close to your warehouse or to your company’s headquarters, or they could take care of logistics themselves, or they could allow you to manage the delivery of the product/service in the most convenient way for you. This flexibility makes it possible to reduce your costs, therefore this advantage should be reflected on the final price. 

5. “Because we want to close the sale as soon as possibile, reducing the administrative costs.”

The bureaucratic and administrative aspects are very expensive for any company, and long purchasing processes make it more difficult to manage production and plan long-term programs. Thus, any customer who wants to buy (and to pay!) tomorrow, without requiring the signature of many agreements, nor asking for multiple revisions of the contract is a godsend! A discount is well deserved.

From a customer’s answer, to your pricing list

These are the more likely reasons your customers will provide, but there could be many others. For example, if they offer you the possibility to test new products/services for you, or if they require a lower level of service, or if they invite you to speak at their trade association congress. When one of these objections is particularly valid in your industry, you can make it part of your price list as a clause to get a discount, making the advantage equal for all your future customers.

For instance, a customer who brings you a reference can have 10% discount on his next purchase, or the one who closes the deal within a week can have the shipping costs canceled.

In short, don’t say “No” right away to the customer discount request, but ask “Why?” instead. You will catch two birds with one stone: in addition to making your customer happy, you will have new ways to increase your visibility and to build customer loyalty, without devaluing your product/service.

And you, what reasons have you ever received from your customers to get a discount? Tell us about it in the comments!

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