Many salesmen tend to think that giving a client a sizable discount does not hurt the company, but works quite the opposite and that it will convince the client to make a purchase. The outlook from quantitative data is not that optimistic. Let’s assume your mark-up oscillates around 30% - if you offer a client a 5 % discount, you will need to increase your sales by 20% to cover it. If you give the client a 10%, the necessary sales increase amounts to 50%. 100% with a 15% discount. Bottom line – discounts are simply not worth it.
There are no free rides
If the client is not happy with the price and expects a discount, you should explain that a lower price is possible, but for a product with lower volume, shorter expiration date and so on. In other words – you need to calculate how much of the inferior product will correspond to your superior product that you offer at the higher price.
Example 1: You want to sell 10 boxes of your product for a $1000. If the client offers you $900 – it suggests that for that price, you can sell him 9 boxes.
This method might seem a little naive, but it is worth remembering that some clients are so focused on the final price of the transaction that they will be willing to agree to a lower quantity of the product, as long as it is the price they want.
In a different scenario, you can ask the customer what price they think is fair. Firstly, it can turn out that, rather than a big discount, they propose brackets for the price that gives you some wiggle room to manipulate it. Even if that’s the case, you should not just go ahead with offering a discount right off. Make it known that a discount needs to be consulted with the director, who later needs to consult it with top management. It is good for the client to see you try to score them the discount, as they will get a feeling of accomplishment – getting it was not easy. If you cave too fast, they will regret not offering an even lower price and ultimately even back out of the deal.
When you already have the price accepted by your client, adjust the product accordingly. The car you are offering can be stripped down of a few extras, the furniture can be made with low-cost materials, the workshop can be shorter and not as comprehensive, etc. Obviously, the customer can note that they expect the same quality for a lower price and if they do, you need to make them realize that the offer needs to fit the price – one for a price-motivated client will differ from the one for a quality-oriented customer.