Entrepreneur
Article
By Craig Buckler

5 Reasons Why You Should Never Drop Your Price

By Craig Buckler

I’m sure your business is going well, but what about potential clients? It’s tough out there and you’ll be approached by companies demanding a discount. That’s their prerogative, but should you agree? Never!…

1. Whatever your price, someone can do it cheaper

If you’ve set a fair price, why should you drop it further? If you discount by 5%, the client will demand 10%. Give them that, and they’ll want more.

Whatever your charges, there will always be cheaper alternatives. You have less expensive competitors. The client may know students or family members willing to do it for a few dollars. They can do it themselves for nothing but time. However, they are negotiating with you because they need your services — don’t be afraid to charge accordingly.

Clients may also promise you future projects or recommend your services to others. Great … you can consider discounts or commissions when that work starts rolling in. You don’t need to offer it on day one.

2. Cancellation costs your client more

Once you reach the negotiation stage, the client has decided to do business with you. You may be their only option. If the project falls apart, the client will need to start negotiations again with an alternative supplier. There’s no guarantee they’ll be better or cost less than you.

In my experience, the biggest hagglers have an inflated opinion of their own business prowess. They’re also the ones who panic most when you suggest terminating the deal.

3. It devalues your service

IT development is a highly-specialized skill. You cannot teach someone to program — they must do it for themselves and it can take many years to become competent. Even web development masters such as SitePoint readers must continually learn to stay on top form.

If development were not a sophisticated intellectual exercise, anyone could do it and prices would tumble. Until that day arrives, there’s no need to devalue what you do.

4. Hagglers are hassle

Alarm bells should ring when a client demands a fixed price or discount prior to discussing their project. In general, these people don’t understand what they need. Similarly, there will be clients working to tight budget constraints. Sympathize by all means — but they’re never going to build a better Facebook for $2,000. It’s not your problem.

Those who bombard you with demands before the project commences won’t stop when agreement is reached. They’re usually the ones who increase scope or change direction on a daily basis. They only go quiet when payment is due…

Unreasonable clients will sap your time, energy and profits. Will you miss out on better projects while you’re working for them?

5. But you can lower costs

There’s no need to take offense or be arrogant toward clients requesting a discount. There’s a simple way to agree with all their demands: remove project features and services. Obviously you should warn that a premium may be charged for maintenance on their half-completed systems.

Under what circumstances would you offer a discount to a client?

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