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Sales insights

Are your discounts closing sales or just discounting you?

3/20/2014

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Come on, you know the drill - you’re pitching your product or service to a prospect and they ask for a discount, or match a competitors quote or you simply offer a discount to get the business today.  Are your discounts helping you close, or are you just discounting you?

The reality is while discounts may help some of the time, they hurt you all of the time in ways you may not be aware.  There’s the trust factor, the profit loss factor and the commoditization factor.

The moment you offer a discount or agree to a discount to win the deal you are automatically admitting that you didn’t really give your best price.  This means you “lied”.  It brings your integrity into question.  They may not say anything to you, but they’re certainly questioning your honesty.  I’ll bet if you look back and track your “discount conversion ratio” you’ve lost more deals than won.  Those you’ve lost, will never become clients because of trust.  That hurts long term.

In terms of profit, if you haven’t crunched the numbers, do you know what it really costs you for every 10% discount you offer?  I suspect not, or you wouldn’t offer discounts.  Every time you drop your price by 10% you have to sell 22% more to make up for the lost revenue.  That’s a ton of extra prospecting and selling, because we know that doesn’t get made up on 1 deal.  Talk about shooting yourself and your sales budget.  

This leads to the third issue when you discount; you commoditize yourself.  The moment you drop your price to meet a competitors is the moment you admit that your offering is identical.  There is no differentiation, there is no value and you have no way to win.  

Stop discounting you.  You are different.  You have value to offer.  You are not a commodity.  You do not need to work harder to make up lost revenue.  You are the difference.  Your discounts are killing your integrity and your business.
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