Everyone has faced that dreaded question from a potential client. That aching, “Please reduce your fee,” question you get hit with after making your presentation on what you can do for them.
We live in a society where consumers—including myself—are programmed to look for a deal. It is not always the client’s fault. Sometimes we offer a discount without being prompted to do so. This can also cause an issue.
We are focusing on a B2B service here, not on purchasing goods as a consumer. Based on my experience, you should never discount a B2B service.
There are others out there who agree. In a post on HubSpot about why offering discounts destroys your sales, New Breed Marketing Director, Alyssa Rimmer asks, “[When you offer a discount], what is that saying to your prospect?”
Rimmer goes on to say that it can show you lack confidence in what you are selling.
“It’s saying that you don’t believe enough in what you’re selling and that you think you can sell it for the standard price. You’re showing your cards, and proving that you have a weak hand. As soon as you offer a discount, your prospect immediately loses confidence in you and sees that you don’t stand behind what you’re trying, wholeheartedly, to sell to them. Confidence is a game changer, so when you’ve lost that, you’ve most likely lost the sale too.
Now, Rimmer is talking about offering a discount, but what about when someone asks for a discount?
“Customers are relentless about asking for discounts, too, believing that getting something cheaper is better,” writes Metal Mafia President, Vanessa Merit Nornberg. “Whichever perspective you look at it from, discounting is not only dumb, it’s dangerous.”
Nornberg goes on to explain that it could actually compromise your integrity if you drop prices.
“Perhaps you will change the way your product is crafted and use lower quality materials to make the discount work,” adds Nornberg. “Perhaps you will have to reduce the level of service you provide, or the speed with which you deliver orders, all in the name of the discount. While this strategy may result in a quick burst of sales, it will also burn your customers.”
With that in mind, there are three main reasons why I stopped discounting my services.
Competence Is Priceless
When you know what you are doing, you need to charge appropriately. Although I focus on digital marketing as a whole, my expertise is with Wikipedia editing. I will use this as an example for why competency is worth its weight in gold.
Wikipedia is its own animal. In fact, I cannot even provide a standard price for all Wikipedia pages. Each project must be evaluated on an individual basis.
After evaluating a project, I must also factor in the cost of any previous paid editor who may have worked on the project.
Here is why:
The profession of Wikipedia editing has become pretty lucrative, and you can make good money doing it—as you can being a doctor, lawyer, etc.. However, you don’t want someone without a medical degree performing surgery on you do you?
Well, that’s what is happening with Wikipedia. Editing services are popping up all the time making guarantees and undercutting just to pick up a project. The problem is they go into it thinking they know what they’re doing and wind up causing problems for their clients.
I am always receiving emails from people who say they went to Upwork or Freelancer, and now their Wikipedia page is deleted. Nothing wrong with going with a cheaper provider. However, they need to be able to deliver, as it takes more effort to correct their mistakes than it would have been to do it right the first time.
So, long story short, you get what you pay for. I don’t discount prices for Wikipedia services simply because you can find the service cheaper on Upwork. It comes down to quality and difficulty which is how I set my price for the service.
The same can be true for just about any profession. If you choose the cheapest contractor to fix your house, you often wind up spending more money when you have to hire a different contractor to fix their mistakes.
Set Prices Right in the Beginning
I am not about negotiating prices. Setting the pricing right in the beginning and not negotiating gives people an upfront feel for what they will need to pay for the services. After I present them with the benefit, they then have the choice to go with me or choose another provider.
Some people set prices high expecting people will want to negotiate. That is fine, but I am getting too old to play games.
As a freelancer, you need to charge what you are worth, not what people want to negotiate from. But how do you know your worth?
There are a few things you can do to help establish your price points.
One way is to charge based on a cost/expense analysis. This would be similar to someone selling a product. If it cost them X amount to make and they want Y amount of profit, then they sell the product for Z.
In an article on LifeHacker, Melanie Pinola talks about using your operating costs along with a profit margin to determine your price.
Another method is to base rates on the industry. Let’s use content writing as an example.
If it costs an average of $100 to have a freelancer write blog content, you need to compare your work to theirs and then adjust accordingly. Is your writing style better or can you show it gets more visitors? If so, you can likely increase your price to $120 or more as long as you can show the value of your service.
Granted, you will not know the exact price points when you are first starting out. However, you will get to know them quickly once you get more leads and start sending out more quotes.
Time Is Limited—and So Is Yours
I am only 40 years old, but that doesn’t mean I will live another 40. The fact is I am at the age where just about anything can creep around the corner and bite me in the ass.
I know my time is limited and therefore have shifted my focus from working toward retirement to enjoying my time leading up to retirement. No more working 80 hours a week at a discounted rate.
In order to do this, I made the decision not to take on everyone who contacts me. Of course, with Wikipedia, I am limited by the client’s notability, but even those who are notable I have cut back to a select few.
I now take on fewer clients and don’t discount anything. Not only do I win by working less hours, but clients benefit as well. I am able to give each client extra attention—not just what they are paying for—so they get a premium without having to pay for it. They just don’t get a discount.
I am not an idiot, and I know there are plenty of competitors out there willing to do the work that I do. However, I also know there is plenty of work to go around. As such, I focus on the clients who are willing to pay for a service as opposed to just shopping around for the cheapest they can find.
I can take my time with individual clients instead of trying to cram as many as I can into a work week in order to pay the bills.
Look at it like this – if a client only wants a cheap service and does not care about quality, they can find that at Upwork or Freelancer.com. You are providing a quality service and should never discount your rate just because someone is trying to undercut you.
Final Thoughts on Discount Services
Competency is a great asset to have when you sell a B2B service. There are many out there who don’t know as much as you about a topic and are likely to provide a crappy service for a cheaper price. If that’s the case, and people want to use that service, let them do so. Again, I say, there is plenty of work to go around.
Set your prices right in the beginning. When people know what they will have to pay, you will weed out many of your prospects and wind up with those who are willing to pay for the competency you provide.
Your time is also valuable. Stop spending 80 hours per week working on discounted rates. Price yourself right according to your skills and you can enjoy the same income while spending less time in the office.
What is your experience with discounting your services? Do you have a set rate or do you go the “negotiation” route? I would love to know your thoughts on giving discounts.
Mike Wood is an online marketer, author and Wikipedia expert. He is the founder of Legalmorning.com, an online marketing agency that specializes in content writing, brand management and professional Wikipedia editing. He is a regular contributor to many online publications where he writes about business and marketing. Wood is the host of the Marketing Impact podcast and author of the book, Wikipedia As A Marketing Tool.
Original article appeared at Influencive. Reprinted with permission.
Photo credit: Influencive