We were recently asked to tender for a piece of work for a client in an industry we have had a lot of experience in.
My team worked together to produce a proposal that covered everything the client wanted and more.
After the proposal had been submitted, we received a call from the client saying they liked what they read but please could we reduce our fees.
My programme manager called them back and, instead of discussing price, she covered over what value we were proposing for the client’s business.
She mentioned that a reduction in fees would not allow us to create all the beneficial products and services we had included in the proposal, which would naturally have an effect on the results we could obtain for them.
If we had reduced the fees, we would have been in danger of not producing the results we had outlined in the proposal.
In other words, my programme manager was focusing on the results we wanted to achieve with the client, rather than cheapening our offer by a reduction in fees.
The client agreed that the results we were discussing were far more important than reducing the fees and they signed the contract with us.
So, what should you remember when your prospect asks you to reduce your price?
Well, remember that your products and services are that price for a reason.
If you immediately discount, the message you are sending is that what you are offering is actually overpriced and not worth what you are asking for it.
This creates a dissonance in the buyer’s mind.
They start wondering ‘if they have overpriced these products and services and are willing to discount in order to get my business, can I trust anything else they say to me?’
Here are four points to remember when you are asked to reduce your price:
- The client’s role is to try to get the best ‘deal’ for their company or themselves, so expect them to highlight price as an issue. They rarely work on the return on their investment before discussing a price reduction.
- The reason they put emphasis on price is they aren’t focusing on what results they will get from your solution. They need your assistance in achieving that.
- If you reduce your price, you never increase value; you always cheapen your product.
- When discussing your solutions, emphasise the results your buyer will achieve, rather than the price-points your products come in at. That way, they will focus on the future for their business rather than making some reductions now.
You’ll see from these points that reducing your price won’t always get you the business.
Think about it for a second; if your product makes your prospect’s business 20% more efficient in time-savings but is 10% more expensive than your competitor who can’t save any time for the prospect, which option would be more beneficial in the long run for them?
Be aware that a request for a reduction in price means you haven’t built up value in the prospect’s eyes.
Concentrate and focus on that first, and there’s no reason why your offer shouldn’t at least be front-of-mind when your prospect is ready to make a decision.