To Discount or Not to Discount

Business Owners

As any small business owner, you’ve undoubtedly been faced with a customer trying to weasel a discount from you. And most have, at one time or another, succumbed and regretted it.

The 100% discount

Customer: If you do my site for free, I’ll bring you more work!

Ahh. The 100% discount. I have NEVER hear of anyone doing free work for someone and getting future good jobs out of it. Ever. Even if the client believed with all their heart that they will “send more work your way”, I have never heard of this working out – in any industry. Consider this: when you do free work for someone, they don’t see you as a professional who makes his living doing this anymore. Most likely, what they’ll tell their friends is that they had someone who “does some websites” create their website.

So, ironically, by giving them a free website, you are conditioning them to value you less. Don’t do this.

What you should remember: Regardless of where you are on the spectrum of skill, you have put some kind of effort into learning how to do what you do. Thus, you deserve to make something for your skill.

How you should respond: My usual response to this is “*smile* I don’t do free websites, but I can offer you a referral incentive: for every person you bring to me that hires me for their website, I’ll write you a check for 10% of what they pay me!” Most of the time, you’ll never end up writing them a referral check because they’ll never bring you any more work. But they’ll be happy with this because they’ll truly believe they will be bringing you tons of customers.

The Economy/Don’t Have the Money

Customer: Do you offer discounts? Money is just really tight right now with the economy, and such…

The economy/Don’t Have Money play is a favorite of many. Watch out! This customer will almost always pay late – if they pay at all. Often, it is a 100% Discount customer in disguise. My favorite story about this is from a college professor of mine. I studied music in college and was teaching piano to kids all throughout my high school and college years (and beyond, for a few as well). In the Piano Pedagogy class, my professor told a story about how she was asked for a discount from the parents of a student. She went ahead and gave it because it sounded like they needed it. Then she went to their house to teach the student. The house was huge; it included a beautiful pool in the backyard…a backyard that was being re-landscaped. They were planning a trip to Hawaii for Christmas. And yet, they couldn’t pay her $30 a week for their child’s piano lessons.

The moral of the story? People choose where to put their money. Whatever they value, that’s where their money will go. And if you want them to value your work, require the money to go there.

What you should remember: If they want a website, they need to invest in it.

How you should respond: “I don’t offer discounts. Here’s why: the product I’m offering you is worth the money you’ll pay for it.”

The Unknown Discount

Customer: I’m sure that you could transfer what you’re doing here to other websites. You’ll be set for life!

Ok, so they probably don’t include that last sentence. I get this all the time from clients – it’s actually the most common way for them to ask me for a discount. By implying that I could use what I’m doing for them with other websites, most of the time they’re hoping I’ll not count those hours towards their bill. They’ll never know how much the discount was for, thus the title of it, but they’re hoping for something.

What you should remember: You usually can’t transfer what you’re doing. If you can, quantify the discount you’re going to provide them so that they don’t balk when they get the bill.

How you should respond: If you can’t transfer – “Actually, even though it seems like that, most work doesn’t really transfer over. However, if you do recommend me to someone and they have me do their website, I’ll provide you with a check for 10% of their total payment.” If you can transfer (and are willing to give them a discount for this, which I still don’t recommend) – “I can transfer some of the work. I can give you a ____ discount on the hours/total cost.”

How to do a Discount Right

There is a right way to do a discount – an advertisement. If you’re offering a new service to old customers, or trying to bring in more customers through actual advertisements, don’t be afraid to offer a discount.

Just don’t make the discount so huge that you’ll be wasting your time or losing money!