What to do when a prospect asks for a discount - MyStartupLand

During the last 10 years of my sales career, I have never had a negotiation where pricing was not an issue. Most people believe that a discount is a synonym of something for free. However, depending on the industry you operate in, a discount might be part of the sales negotiation process. Understanding what to do if a prospect asks for a discount is crucial for your company long-term success.

Before diving into what to do and how to respond to a discount question, it’s important to set some internal processes when it comes to discounting prospects.

  1. Create a process around discount, i.e. When should your team give a discount to a prospect? What percentage are you ready to discount? What budget should a prospect commit to being eligible for a discount? Understanding these points and communicating to your team the best approach will create internal standards. In this way, you don’t need to review each and every discount situation.
  2. Understand your bottom line, i.e. How many prospects can you discount without harming your profits? What should be the discount range you can afford?

Once you have clear these two points, you can move on the next part.

Your Prospect Asked For A Discount, Now What?

If you are in sales, you know that discounts are a natural part of the negotiation process. It is unlikely someone will sign a deal without questioning your pricing, especially in a B2B environment.

The following 5 ways will help you deal when a prospect asks for a discount.

1. Assess The Prospect’s Needs

Most sales situations are based on understanding what are your prospect’s needs. Can your product or service fulfill her needs? This is a key question that you and your team need to be asking all the time during the negotiation process.

When the discount question comes in, acknowledge the prospect question and dive into the value they are looking for. Sometimes, prospects ask for a discount for the sake of it. Other times they haven’t yet understood the value of your product or service.

2. Consider The Negotiation Stage

The negotiation stage is not straightforward. It’s like a dance and you must dance with the prospect in the right way. Leading, but giving the feeling that you are actually been led.

It’s not easy.

When it comes to discount though, it’s important to understand whether the question is coming in too early.

If the prospect is asking for a discount at the beginning of the negotiation process there might be some deeper problems. It could be that this prospect is not yet ready to commit to that budget and is making sure to set the right expectations. If that happens, you need to stop and think whether:

a) this is a prospect that fits your company long-term revenue strategy

b) this is the type of client that will bring any value to your business

3. Understand Why The Prospect Is Asking For A Discount

Why a prospect is asking for a discount - MyStartupLand

It’s simple, yet often forgotten. Asking why can be eye-opening from a sales perspective. This can give you a lot more information on what is happening on the prospect side. It can be that the prospect cannot commit to a specific amount of money all together and might need a different deal structure.

Understanding the reasons why a prospect asks for a discount can help you achieve more and structure proposal in a more compelling way for your potential clients.

4. Structure The Deal In A Favorable Way To You

When a prospect asks for a discount, we might be tempted to jump into it, because we want to close that deal. It’s important tough to create favorable terms for your company if you decide to go ahead with the discount.

Asking a prospect for a longer commitment when giving a discount can be a way to protect your interests. Making sure that they sign up for a longer period of time, and get discount only at the signup and not over time, is important to avoid giving the prospect the idea that discount is part of your normal procedure.

5. Understand What Would Make The Prospect Pay The Full Amount

When a prospect pushes back on pricing, it can be that you or your sales reps haven’t done a good job at selling. Have they explained the value of your product and service well enough?

Before giving away a discount, try to uncover any possible gaps in the sales process that you might have missed. Revisit any objections the prospect has brought up in the buying process and understand where there are opportunities to negotiate on other aspects outside of pricing.

Sales Negotiation - MyStartupLand

Dealing with a prospect that is asking for a discount is not an easy task. Most of the time we just go with the prospect to avoid any further delay in the buying process. But, is this the best way to produce results that make sense for your company? If you give away discounts too easily, you might harm your company bottom line. Unless you have a very good reason to give out discount (for example a new product line with early-stage technology), you need to assess every single discount request and position your offering in the right way.

How do you manage a prospect asking for a discount? Do you have any other advice? Share your thoughts in the comment section below.

Luca is an experienced sales executive and business coach with a background of over 10 years in sales and management. When not working, Luca runs one of the leading online magazines for startup knowledge, MyStartupLand, with the aim of providing meaningful and helpful content to startup founders and business people.

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