The Strategic Value of Handling Discount Requests
When a prospect asks for a discount, the immediate reaction is often defensive. Many sales professionals view this request as a challenge to their pricing structure or a sign that the deal is slipping away. However, a discount can actually help accelerate a slow-moving deal, create goodwill, and provide leverage for requesting concessions. The key lies in strategic application rather than automatic compliance.
Promising a discount before the actual negotiation phase can have three negative consequences. First, the buyer subconsciously attributes less value to your product. If the return on investment is as strong as you claim, why are you so willing to sell it for less? Second, the focus shifts from value to price. Instead of thinking about the potential impact on their business, the prospect focuses on the cost. Third, you lose bargaining power. Successful negotiations require give-and-take.
If you offer a discount in the early stages of the sales process, you miss the opportunity to ask for something in return because you do not yet know what the prospect wants. This sets a dangerous precedent of one-way concessions. When the time comes to put together the actual agreement, the buyer will be accustomed to getting what they ask for without giving anything up. Responding to discount inquiries during the actual negotiation is challenging, but it allows you to satisfy the prospect’s expectations without destroying your profit margin.
Responses During the Connect Call
During the initial connect call, the goal is to establish rapport and understand the prospect’s needs. If a discount request arises at this stage, it is essential to handle it carefully. The following responses can help you navigate this conversation without compromising your position.
Deferring the Discussion
“You’re asking the right person. But before we discuss discounting, let’s figure out what you’re looking for in an offering. That will allow me to give you a far more accurate estimate.”
If the price of your product or service depends on the individual prospect’s needs, goals, and situation, it is too early to discuss discounts. Without knowing the final value of the deal, you cannot determine a rate that will both satisfy them and keep you in business. Brushing off the prospect’s question will make you seem more interested in your agenda than their own. Instead, acknowledge them and explain why it is mutually beneficial to table this discussion until later.
Probing for Budget Constraints
“Good question. Do you see price being a major obstacle to this purchase?”
Some objections cannot be overcome. If the prospect’s request comes right after they have asked for pricing information, it is possible they do not have the budget to purchase your product at full price. They are trying to learn whether you will consider a discount. If you say no, they will likely walk away. Alternatively, they might be capable of paying the normal rate but are interested in getting a discount if they can. This question helps you figure out the buyer’s motivations. If they respond that price will not be an issue, use the first response. If they say it is, delve deeper into their financial situation. You might need to disqualify them if your product is too far out of their reach.
Responses During the Sales Presentation
At this stage of the sales conversation, a discount request usually indicates the prospect’s desire to buy. Since they agreed to a demo or presentation, they are clearly interested in the product. Now they are thinking about the details of the purchase. However, do not promise them a discount just yet. Automatically granting their request will make you seem overly eager to close, which will work against you during the actual negotiation. It may also lead your prospect to wonder if they have misjudged your product’s value.
Confirming Fit Before Pricing
“We can definitely have a conversation about specific numbers, but let’s make sure we’re on the same page about this solution being a good fit for your needs.”
Use this response to delay the conversation. You are not saying a discount is off the table, but you are reminding the prospect that it is not relevant until you are both certain there is mutual fit. This approach reinforces the value of your solution and ensures that the prospect understands the benefits before focusing on the cost. It also allows you to gather more information about their needs and tailor your presentation accordingly.
Strategies for the Negotiation Phase
The negotiation phase is where the final deal is made. This is the time to discuss discounts, but it must be done strategically. The following responses can help you navigate this conversation effectively.
Asking “Why?”
“Why?”
Speaker and writer Jurgen Appelo recommends using this simple and effective response when negotiating with buyers who are haggling for the sake of it. He explains that such clients often assume that the seller is intentionally overpaid and that, with some negotiation, it should be possible to talk the fee down to the “proper” price. In Appelo’s experience, prospects will often say they were “just wondering” and will go on to pay the entire price. Notice that you do not say “no” to people who ask for a discount. It is quite possible that they have a very good reason. It all comes down to customizing the value exchange. For example, the buyer might be dealing with a seasonal budget or experiencing a short-term cash deficit. Consider discounting in these cases, but make sure you ask for something in return.
Offering a Quid Pro Quo
“I can offer you a discount if we [extend the contract, adjust the terms of payment, go with X package or tier, register Y seats].”
Compromise is essential to most negotiations. By offering a quid pro quo discount, both you and the buyer will come out ahead. It is a good idea to walk into the discussion with several non-monetary requests, which will help you open up the negotiating possibilities beyond price. This approach ensures that any discount is balanced by a corresponding benefit to your business.
Clarifying the Reasonable Discount
“What would be a reasonable discount?”
MTD Sales Training managing director Sean McPheat suggests using the prospect’s response to turn the question around. If your product is $10,000 and the buyer says she would like a 15% discount, ask, “Are you saying you think $10,000 is too expensive for [product] or you don’t want to spend more than $8,500?” This reveals whether they are not sold on the true value of your product or simply cannot afford it. If it is the latter, offer them a reduced or less comprehensive option. You might say, “Previously, you chose [more expensive option] because [it would help you accomplish X in less time, provide maximum cost-benefit savings, ensure you had enough coverage, etc.] But we do offer [less expensive option] for $7,600 if you don’t want to spend more.” According to McPheat, this offer lets you maintain your margins while maintaining value. If your prospect says they want the more expensive product at the lower price, return to the value conversation.
Exploring Value Gaps
“What would need to happen to make our offering worth the price I quoted you?”
When a prospect pushes back on price, it is possible they do not have the budget for your product or service. It is also possible you simply have not done a good enough job of selling it. By asking “What would need to happen to make our offering more valuable to you?” you can uncover gaps in the case you have made and identify objections that might still exist. It allows you to add or argue value for your offering and, if you meet the needs outlined by the prospect, to earn full price.
Proposing Flexible Payment Terms
“Would a month-to-month plan be enough to get you to close today?”
You may not be able to offer this, but month-to-month plans can be a great way to get prospects to close without discounting your product or service. Month-to-month plans are usually easier for prospects to get approved than annual contracts. If you believe this prospect is a great fit for your solution, a month-to-month contract should not scare you. Instead, you get the chance to prove your value to the prospect-turned-customer and earn the annual contract, or the cross-sell or upsell, in the future.
Rescheduling for Future Budget
“What if we connect next quarter? Do you think you’d have more budget open up then?”
Sometimes your solution is just not in the cards for a prospect’s budget. Hopefully, you have discovered this early in the buyer’s journey, before you have devoted too much time to trying to close them now. Make sure you have exhausted all opportunities to work with a prospect who is really enthusiastic about your offer. But, if the budget just is not there, you can gently ask this question to lead both parties into the best option at the moment. This approach helps you maintain the relationship and keeps the door open for future business.
