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Do you give discounts?
For original blog post and video, see:
http://blog.davidparrish.com/tshirts_and_suits/2009/08/negotiating-...
If customers believe they can get a discount from you, it's because they think they can go elsewhere and get the same thing cheaper. If they can in fact get the same thing cheaper elsewhere, then you are in a marketplace with lots of competitors, all competing on price. So you are in a poor negotiating position. It's a losing battle.
Instead, build your business around those goods and services at which you excel in relation to the competition. Better still, focus on your uniqueness, providing goods and services that nobody else can. Customers will then have nowhere else to go and your negotiating strength increases dramatically.
To do this requires an understanding of your competitors and your market positioning. It means that you need to choose your customers carefully, selecting those people who want what you can uniquely offer.
So be prepared to say No when people ask for a discount. Only the wrong kind of customers will walk away, which is good because you can never build a thriving business around them. The right kind of customers - the ones who recognise the how special you are - will pay the price. These are the kind of customers to build your creative enterprise around.
- What's your business policy when it comes to giving discounts?
- Do you know how special you are? In other words, do you know at which products/services you excel in relation to the competition?
- Do you target those only those customers who want what you are especially good at?
It's only when you have devised your own unique business formula, based on your speciality and your special customers, that you can say No to customers asking for discounts.
What's your policy on discounts?
What's your Unique Business Formula?
http://blog.davidparrish.com/tshirts_and_suits/2009/08/negotiating-...
If customers believe they can get a discount from you, it's because they think they can go elsewhere and get the same thing cheaper. If they can in fact get the same thing cheaper elsewhere, then you are in a marketplace with lots of competitors, all competing on price. So you are in a poor negotiating position. It's a losing battle.
Instead, build your business around those goods and services at which you excel in relation to the competition. Better still, focus on your uniqueness, providing goods and services that nobody else can. Customers will then have nowhere else to go and your negotiating strength increases dramatically.
To do this requires an understanding of your competitors and your market positioning. It means that you need to choose your customers carefully, selecting those people who want what you can uniquely offer.
So be prepared to say No when people ask for a discount. Only the wrong kind of customers will walk away, which is good because you can never build a thriving business around them. The right kind of customers - the ones who recognise the how special you are - will pay the price. These are the kind of customers to build your creative enterprise around.
- What's your business policy when it comes to giving discounts?
- Do you know how special you are? In other words, do you know at which products/services you excel in relation to the competition?
- Do you target those only those customers who want what you are especially good at?
It's only when you have devised your own unique business formula, based on your speciality and your special customers, that you can say No to customers asking for discounts.
What's your policy on discounts?
What's your Unique Business Formula?
Replies to This Discussion
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Permalink Reply by Peter Drought on -
My experience of offering discounts is that it is largely a waste of time. I have used it in the past to try and stimulate demand at various times of the year (ie a limited term offer). It is largely useless and I got no response. The only people who do respond to them are time wasters who want even more money off, to such an extent that you have to turn around and walk away because there is no way you could ever make a living selling it to them at that price.
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Permalink Reply by David Parrish on -
Thanks Peter!
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Permalink Reply by Ken Church on -
Everything in this piece is right, only there is a good reason to give a discount. To get paid early. One of my major accounts always paid within 14 days (in a business environment that usually paid in 60 days) for a 5% discount. As a result I called them my 'banker' account because I could always rely on some cash flow.
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Permalink Reply by Della Clark on -
I give discounts. When I am selling retail and people ask then yes I am prepared to give a small discount, I know what my margin is. I also give discounts to loyal customers. In both instances it makes people feel good and they remember me. I don't view it as negative, I am not working for free, we all have a profit margin so we know how far we can go.
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Permalink Reply by Rob Kinsey on -
Pricing is such an emotive subject. With my paintings, it's all about perceived value, justifying the time it takes, often 30-35 hours a commission to complete.
I try to resist giving discount where possible. Sometimes I have given customers a reduction on another commission after they have already placed work with me, sort of a loyalty bonus, plus it's alway's easier to sell to your existing clientelle than chase new ones!
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