When a customer asks you to lower your price, do you say yes and sacrifice your profit, or say no and risk losing the deal?
Agreeing to a lower price can eat into your profits and put pressure on cash flow, while refusing outright can create tension and make customers reconsider working with you. But you don’t have to choose between protecting your bottom line and keeping your customer happy.
In this episode, Ben shares a practical approach to handling price objections by acknowledging the customer’s request and working with them to find a solution that creates value for both sides.
In this episode, you’ll learn how to:
- Respond to discount requests without creating tension by acknowledging your customer’s concerns and showing you’re willing to work with them without immediately agreeing to a lower price.
- Add meaningful value without sacrificing profit by offering benefits that matter to your customer but cost your business little or nothing, such as an extended warranty, extra support, introductions or promotional opportunities.
- Negotiate price by adjusting the scope of your offer by asking customers what they would be willing to remove or sacrifice, helping you explore a lower price without automatically giving away value or damaging your margins.
Play this episode to discover how to handle discount requests confidently, protect your profit margins and close more deals by creating value instead of simply lowering your price.
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Episode Transcript:
Ben Wright:
You know you’re discounting more often than you should and that’s impacting how many sales you can win. Here’s something you can try that will make a difference to closing more deals with less discounting.
Intro:
Welcome to Trade Sales Made Simple, the show helping seven to eight figure trade, construction and industry leaders finally end the stress of inconsistent sales by simplifying your sales systems so that you can close more deals and grow faster.
I’m your host, Ben Wright and over the last 15 years, I’ve helped hundreds of trade and sales leaders grow their businesses and generate over $200 million in additional revenue by simplifying their sales processes.
Let’s get started.
Ben Wright:
Today is a very focused, short, sharp podcast episode around what to do when a customer asks you for a discount. As a business owner, as a salesperson, we have all been there when the customer says can you do it cheaper. I like what you’re offering but can you be sharper on price. Is there anything you can do around the cost for this? Can you give me a discount? It happens time and time again and unfortunately we’re stuck in a very difficult place when we don’t know how to handle this.
Respond to the customer with a no and there’s some instant tension that builds up in your relationship and fear from a salesperson or business owner or whoever’s in front of the customer representing your business, a little bit of fear that you’re going to lose the deal. No matter how strong you think that value is, when you say that no there’s a risk that your customer walks away. Saying yes has a very similar impact but for different reasons.
Instead of losing the sale, you’ll be winning the sale right off of that discount. It’s at lower margins and your profits of the business suffer and it’s not only profit that suffers but also cash flow and when cash flow suffers it puts pressure on all elements of the business. So in my experience saying yes or saying no are both fraught with significant amount of danger.
However, there’s another option that can create significant value for both sides of the equation, customer and business and that approach is to say let me see what I can do to work with you on price. Let me see what we can do to create more value for you. Okay, I understand what you’re saying.
Let’s have a look at what we can do to make things work for you. Very subtle differences of essentially saying I want to work with you. I want to try and make things happen.
Now that’s not a no but it’s also not a yes. It’s saying I hear you. I acknowledge what you’re saying and there is so much information from a psychological perspective around how people feel when they’re heard even if that means they don’t get the answer they want.
So by simply hearing our customer, responding back to them that we’re willing to work with them, we are already creating an environment where success can foster within. We’re creating that moment where our customer can say this is why I wanted to work with this person. They are a good person.
They’re a good bloke. She’s listening to what I have to say. So from there we’ve acknowledged that the customer wants that discount by saying let me see what I can do to work with you.
There’s two ways that I see work really successfully for businesses to close deals. The first one is to find a value add that costs you nothing but adds some value to that customer. It might be a slightly extended warranty.
That’s a nice and easy option. It might be a commitment to delivering by a certain time. It might be agreeing to spend a little bit more time with them as a salesperson to roll out whatever product or service that they’re buying from you.
It may be to give them a testimonial. It may be to promote them through social media within your business. We do it at 1111 Studios.
We know that when we can promote our customers it has a great benefit to them. It may be introductions that you can make. It may be groups you can put them together with our content club.
We bring really smart individuals from around Australia together to build their social media content in a beautiful studio. Absolute added benefit versus giving someone a discount. So option number one is to find some value add that costs you nothing but is meaningful to them.
Option number two is to start to look at your scope of works and that starts the question along the lines of if we needed to remove something from our product, from our offering, from our service, what would it be? Can you talk me through what’s least impactful to you about the service that we’re offering? Can you talk me through about anything that you don’t need? Can we have a look at the list here and find something you’d be prepared to sacrifice? So we’re throwing it back to our customer to say I can offer you that cheaper price but what are we going to trade off in return? I’ve certainly seen more often than not in this instance the customer come back with don’t worry about it, leave it in there, let’s get going because you’ve acknowledged their request but you haven’t been a pushover. You’ve made them feel heard without impacting your bottom line. You’ve actually listened to what they’re saying and not responded with a no and giving that customer some trepidation or second thoughts around whether or not they want to work with you.
So by not saying yes, not saying no, but offering to work with your customer around your solution and finding some value that’s impactful for them but of no cost to you or stripping back out of your service the least important parts which invariably lead to in most cases the whole package being taken anyway. We’re acknowledging our customer and we’re creating an environment where they feel heard, trusted and that you’re the best person for them to be working with. So that’s the key takeaways from today.
When a customer asks for a discount don’t say no but equally don’t say yes. Offer to work with them and try to either add extra value or remove some services to then lower that price. Both of these instances I see work more often than not which means more often than not the deals get done.
Now if you’re a business that is quoting a lot, you’re not winning enough deals, you’re getting stressed out because they’re not coming through, it’s impacting cash flow, your close rates are not high enough and you know you’re ready to grow as a business but need a little bit of help, our sales and marketing workshops they are going to be elite. They are launching very, very soon but they are waitlist only. If you’d like to be on that waitlist please jump onto our show notes, click to be added to it and we’ll let you know as soon as they’re ready.
That’s it for today. Please keep thinking about how you can be 1% better each and every day because it does make all the difference. Bye for now.