Answer a discount request by asking for something in return, instead of just cutting the price.
Hafiz has sent a proposal to Rachel's firm. Kelvin, Rachel's director, reads it, says he likes it, and asks for ten percent off, adding that the firm can probably move ahead if he gets it.
Hafiz expected this request. He wants the deal, the firm has a night shift coming up, and ten percent feels small to him. If he agrees, though, each of them learns something about the other, and most of what Kelvin learns makes the rest of the deal harder for Hafiz.
If you cut the price only because the buyer asked, you tell them the first number was padded. After one free cut, they wonder how much more a second request would get. Their side may have a finance manager who is already comparing vendors, and a free discount gives that person a reason to push harder. A buyer who got a discount just for asking will also ask again at renewal next year.
There is a hidden cost as well. If your original price had a real reason behind it, a free cut means you do the same work for less money. If it had no real reason behind it, the buyer was right to doubt the number you first quoted.
You can still move on price. The rule is that when price moves, something else moves with it. To trade is to lower the price only in exchange for something that has real value to you, instead of giving the reduction away for nothing.
The first is a longer term. A two-year commitment instead of one gives you more certainty, and that can justify a lower monthly fee.
The second is a faster decision. Signing by a set date can be worth something to you if it helps you plan your team's time, as long as the deadline is genuine and not one you have invented to hurry the buyer.
The third is a smaller scope. You take something out, such as fewer users, a module the buyer rarely uses, or one training session instead of two, and the price drops because the work you have to do drops with it.
Hafiz uses the first. He tells Kelvin he cannot take ten percent off the twelve-month plan. With a twenty-four month commitment, though, he could bring the monthly fee down from S$480 to S$440 (example figures). Kelvin now chooses between S$480 a month for one year and S$440 a month for two years. S$480 minus S$440 is S$40 a month, which is S$480 a year. Hafiz doesn't lecture Kelvin about value and doesn't refuse to talk. He makes the offer, sets out both options, and leaves the choice between them to Kelvin.
The same pattern works when your buyer is a person rather than a firm. Priya's buyer, Joel, has a service that includes till checks. Priya could offer him option two at a lower fee if he moved from weekly till checks to fortnightly ones. That is a smaller scope at a smaller price, and Joel is the one who decides whether the lower fee is worth having fewer checks.
Concessions made under pressure are usually bad ones. In the meeting it is hard to think clearly about what a discount costs you, so Hafiz decided before he walked in. He wrote down three things:
His lowest fee: S$440 a month, and only on a twenty-four month term. Trades he could offer: a longer term, removing the leave module, or a decision before the end of the month so setup could start before the night shift. His walk-away point: the firm wants the full product at S$440 on a twelve-month term.
Your walk-away point is the point where you would rather lose the deal than accept it on those terms. When your limits are written down, you don't have to improvise, and the buyer can see that you are calm.
Before any meeting where price may come up, write down three things: the lowest price you will accept for this work and why, what you could ask for in return if the buyer wants to go lower, and your walk-away point. In the meeting, if the buyer asks for a discount, don't cut the price for nothing. Offer a trade: a longer term, a faster decision with a genuine reason, or a smaller scope. Set out both options clearly and let the buyer choose.
Only the sales side of negotiation is covered here. The habit to keep from it is to decide your limits in advance and to trade instead of giving. Two ideas from the wider subject are worth knowing by name. Your BATNA is your best alternative if this deal does not happen. Anchoring is the way the first number named tends to shape what follows. Both are taught properly in the course "Negotiation: salary, deals and everyday asks", which covers the wider subject of negotiation.
If buyers ask for a discount in most of your deals, go back to the earlier steps. One possibility is that the value was not clear before you named the price. Lesson 3.1, "Make the value clear before you say the price", deals with that. The other is that you are selling to buyers whose problem is too small for what you sell.
Before the activity below, pick your main product or service and the price you usually quote for it.
Write down three things you could ask for if a buyer wants a lower price, and set your walk-away point for your main product.
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