Should you negotiate (or discount) your prices?

Jan 27, 2012

Should you negotiate (or discount) your prices?

We had a really interesting discussion during one of my Mentorship calls this week about negotiating your rates.

If you told someone your rates and they asked you for a lower or different price, are you willing to negotiate?

I take a very firm stand on not negotiating or discounting – for the reasons I mention below – whereas others in the group have and will negotiate with potential clients.

Why won’t I negotiate?

  • I know what I’m worth – I’ve done a lot of work in my business around this and am very purposeful in my pricing and how I package and offer my services. I’m not willing to change that. And if I do a good job of demonstrating the value of what I offer during the sales process, then it shouldn’t even come up.
  • I don’t ask for discounts from other people – I’m a believer that if I ask for or expect other people to negotiate their rates or give me a discount, then I’m expected to do the same! (If you are someone who asks for a discount, don’t be surprised if people refuse to pay your full price.)
  • I’ve seen too many people discount their rates and have it come back to haunt them – countless times I’ve seen people agree to a lower rate because they wanted the money or wanted to work with that person… only to have it come back to haunt them down the road. If you negotiate too far beyond what you are worth, it will cause issues down the road, usually in the form of resentment, sour relationships and mismatched expectations.
  • I’m not a good negotiator – on my honeymoon in Mexico years ago, I actually offered to pay *more* to the guy selling me a bracelet vs. trying to negotiate him down to less. It’s just not something I’m good at or enjoy doing, so I don’t. 😉

Bottom line – know what you are worth and stick to your guns. And if you are a good negotiator maybe you “go there”, but if you are like me, then stick to your guns. 😉

How about you? Are you willing to negotiate your rates? And if so, what criteria do you use in your negotiations? When you have negotiated for a lower or different rate, how did it work out?

6 Comments

  1. Lisa Wells

    I remember listening to Suze Orman tell a woman to “take yourself off the sale rack!” And it was such a powerful analogy – we tend to put ourselves on the sale rack because we want to make others feel good, even at our own expense.

    Years ago I had a complex pricing system that I could never even remember and would let clients barter with me to the point that I was basically working for half price . It was ridiculous. But I can understand when first starting out, I didn’t have the confidence and felt like I needed to pay my dues somehow. Now I mentor service professionals to NOT do that as it’s a big mistake.

    I’m like you Tina and don’t like it / not good at it and having my rates on my website helps a lot – I don’t like playing the uncomfortable negotiating game.

    Reply
  2. Heike

    Offering my services at dumping prices killed my team as I found it too hard to pay my subcontractors decent rates when the clients offered only low fees. It just doesn’t work if you earn only a few dollars per hour because you have so many costs in your business you often don’t think about it when agreeing to the discounts.

    I found it hard to stay firm on my rates so agreed to discounts which cost me dearly. I guess I need to see this as an experience, but it did really damage my feelings about the business because I felt like I couldn’t stand up to clients who just demanded a discount. It ended up that every client wanted a special dumping rate because I was too weak to say no and the difficulties matching the rates received from clients with the rates of contractors, especially when you have a  quality one who deserves a higher rate, AND trying to get a profit becomes impossible.

    You are so right about not negotiating and rather give those clients a miss. They only give you low self confidence, upset, resentment and trouble in the long run. Sure, it’s an area I have to work on and really learn to say “no” in the beginning of a relationship, something I struggle with a lot, sadly.

     

    Reply
    • Anonymous

      Where are you at with this now Heike? Are you “standing firm” in your rates or is this still something you struggle with? If it’s still a struggle what do you feel you need to get to a place of confidence in your rates?

      Reply
      • Heike

        I’m getting back into the game in 2012 as I see the need for so many new online business entrepreneurs for help, even in my country of residence, New Zealand, with more and more women seeing a need of pursuing a home based business so stay at home with their children. So the challenge will come up again. As I have experienced the detrimental effects of discounts I need to stand up for my rates, I hope I have learned my lesson. I don’t know how I will address this challenge, I think time will tell…

        Reply
      • Heike

        I’m getting back into the game in 2012 as I see the need for so many new online business entrepreneurs for help, even in my country of residence, New Zealand, with more and more women seeing a need of pursuing a home based business so stay at home with their children. So the challenge will come up again. As I have experienced the detrimental effects of discounts I need to stand up for my rates, I hope I have learned my lesson. I don’t know how I will address this challenge, I think time will tell…

        Reply
  3. Amy Derr

    When I first started my business 9 years ago, I admittedly did negotiate my rates.  The number I was focused on was the number of clients I had, not so much the money number.  Nowadays, I stick to my rates.  It’s been a bit of a mindset journey.  Over the years, I had many coaches telling me I was undercharging, etc…. but I’m proud to say that I now am firm with my prices and it does feel good to charge what I’m worth!!

    Reply

Submit a Comment

Your email address will not be published.

How Scalable is your Business?

Take our 5-minute Assessment to find out if your business is ready for the next stage of growth (and if not, what is missing…)

Archives