Offering a discount to help motivate the prospect can often be a powerful inducement to close a few more sales.  However, dropping your price in the wrong way will cost you a ton of lost sales, it will reduce your margins to nothing and in addition you could lose the prospect’s trust and respect and possibly damage the credibility of your company.    

The Steps to a Price Reduction (In the right way!)
Offering a discount is a delicate issue and you should only use it as a last resort.  However, when necessary, follow these steps:

1. Stand Firm 3x

2. Build Value 3x

3. Reduce the Price for a Valid and Justifiable Reason

1.     Stand Firm 3x
After you have offered a price and attempted to close on that price, you have to understand that you cannot just arbitrarily change it.   Once you made an offer, you must stick to that original offer and price as long as possible.   If you change or reduce your price too quickly, then what was your first price? Was the first price just a way to see how much you could get?  Stand firm on your original price, and close on it at least three times, before even thinking about a discount. 

2.     Build Value 3x
As you are closing on the first price, continue to raise the value of the product or service.  Remember, price objections are actually about value, not money.  Continue to increase the value and costs of the prospect’s problems and pain. Raise the value of the original offer at least three times. 

3.     Reduce the Price for a Valid and Justifiable Reason
Now, you are ready to slightly reduce the price, but only for a good reason.  You must have some justification to lower the offer.  If the prospect feels that your price drop is nothing more than the stroke of a pen, it becomes worthless.   Find valid reasoning and reduce the price as if it is your money that you are giving away. So you can drop the price by 10% but what gives? Also, this is also a great place to get referrals.  You can essentially buy the referrals from the prospect, offering the price reduction in exchange for contacts. 

• Stand Firm 3x
• Build Value 3x
• Reduce the Price for a Valid and Justifiable Reason

If you reduce the price incorrectly, you reduce the value along with the price.  If you price drop as above, you will raise the value as you reduce the price.

Happy Selling

Sean

Sean McPheat
Bestselling Author, Sales Authority & Speaker On Modern Day Selling Methods 

MTD Sales Training

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We’ve all been there…

“What’s the best price can you do? Can you offer me a discount?”

And then the negotiation starts!

The fact that you’ve received that response means you are nearly there in the first place! And now with just the right approach you can get back to the office and update your CRM system with a CLOSED WIN in next to no-time!

My approach to responding to discounts and counter offers is the following:

VALUE X 2 MINUS 1 PRICE

What this means is that when you’re faced with a “Can you give me a discount?” response you should not just cave in to start with. Instead you should respond with a value building statement and stay firm. If they come back again, then do exactly the same. But if they come back a third time then you should give a concession and ask for something in return.

You’ll be amazed at how little you actually have to give discounts by standing firm!

Now I love getting referrals in exchange for discounts because it’s money in the bank.

So I’d say something like this “I’ll tell what I’ll do Joe. I’ll reduce the price by 15% if you can give me the names and phone numbers of 5 quality referrals that you’ve worked with who also need this service too. Is there any other reason why we can’t go ahead with this?”

Quality referrals are like gold dust and they have a monetary value too because the replace advertising spend, so that’s why I really like getting them in exchange for a slight discount.

So, in summary:

Remember VALUE X 2 MINUS 1 PRICE

Build the value twice before you even entertain lowering your prices and then if you need to lower your price do so by asking for something in return.

In today’s economy you’ll come across a lot of people who will ask for discounts so practice hard on what you’ll say and how you’ll say it when faced with the “Can I have a discount?” response!

Happy selling

Sean

Sean McPheat
The Sales Jedi
MTD Sales Blog

MTD Sales Training

Have you downloaded my latest report yet? “The Sales Person’s Crisis” has been downloaded by over 10,000 sales pros and entrepreneurs. Don’t miss this unique report that lifts the lid on modern day selling!

Click on the image below to find out why you’re very existence as a sales person is in doubt…