By Bryan Orr
You met a guy at the Chamber of Commerce. He seemed nice enough. He is a successful businessman in your town and when you started talking it became clear that you might be able to do business together.
He alluded to the idea that “If you take good care of him, you may stand to get a lot of business.” You see he knows important people, and being “on the in” with him and his friends could be big for your business.
Why Discounts Are a Bad Idea
If you have been in business long enough you will have conversations like this, and SOMETIMES you will get the idea that good service isn’t all they are looking for. They are looking for a “good deal” or a “hookup,” receiving discounts in exchange for potential future business or influence.
Before I say what I’m going to advise, I want you to know that MANY people disagree with me on this, but in my experience… the people who disagree are often the same ones looking for that special treatment.
Think about this for a minute: you are in business to make a profit, enjoy your work, and in some cases, support a family; and so are they. Why is it good practice for them to ask you to charge less than usual just because they are real swell? Would it be different for you to ask them to pay more than usual because you are such a good person?
Business is all about a mutual exchange of quantifiable value. If someone hires you to trim a tree, you can’t ask them to pay you extra because someday you might trim some trees for free later on; that doesn’t make sense. It’s just as senseless when a smiling influencer asks you to give them a good deal because someday you might get more work out of it.
When Discounts Make Sense
There are some exceptions that make sense, but they are either altruistic or quantifiable.
If you want to give someone a discount because they are on hard times or just because you want to, that is your prerogative and within your right to do so. First, check your motives on it. If you are doing it in hopes of getting a testimonial or word-of-mouth advertiser leading to some future business, the testimony is of someone that got an abnormally low price. You will often find that the sort of business you will get is more people looking for deals and handouts. It is usually better to do acts of charity without any fanfare or expectation.
When a connection commits to a volume of business or agrees to long term commitment with you, they will often expect a discount, and it might make sense. If you are able to legitimately capture a large quantity of business without the associated marketing expenses, there is tangible value to you and to them. Just make sure that what you are getting from them is an actual commitment and not a nebulous “maybe,” or “I’ll recommend.” If you do this, work together to quantify the actual benefit to you and to your connection.
Whenever you are looking to do business with someone, you want to be sure to focus on the value you will provide and then work to deliver that value. If it is kindness, make it about the kindness. If it is in exchange for a real benefit and not vague promises, consider it as you would any other advertising or business expense. Your goods and services are worth what they are worth. When the conversation switches to discounts and price, keep it simple and straightforward and don’t budge. At least that’s my take on the subject… but if you give me a deal, I might give you even more good advice in the future.