Don’t Let the Price Discount Be the Carrot that Pulls You To the Precipice
Many if not most businesses like to request price discounts as a condition to make a purchase. Price bargaining may work best for physical products but rarely harmonize with web services. Subscription models are also different because you can get discounts based on yearly prepayments. Back to the web services which include digital marketing services… What many businesses don’t know is that when a vendor succumbs to price discounts for their offering, they will typically find ways to reduce their own costs later on during the execution of the campaigns. To keep the margins attractive enough, vendors may employ their most junior staff to work on the projects instead of the most senior ones, who are typically reserved for the best clients. This is just one example of many. Price discounts cause cash flow problems for vendors, which in turn may come back to hunt the buyers at the end.
We are not advocating against negotiating the terms for the right deal, especially when entering into a long-term contract. What we are saying is that a vendor should be seen as a business partner (not a short-term service provider), and you want your partners to feel happy and satisfied with their work. When they are happy working for you, miracles happen, those you feel “wow, glad I have them on my team!. After all, vendors are extensions of your own team. When you cut corners and undermine what they do, you are not securing savings for your business but instead assuring inefficiencies along the way. These hidden costs are sometimes hard to measure, but they do exist, and end up hurting your bottom line.
A different and more constructive approach for clients: ask to add extras for the same price
When your request to add extras for the same price is granted, guess what… You have implicitly earned a discount. But it’s a totally different type of discount. It’s the discount you actually want, one that is a win-win for both you as the client and your vendor. Nash equilibrium!
Reasons why we don’t give discounts when we send proposals but offer instead added value services as extra incentives
At Hispanic Market Advisors®, we don’t offer price discounts after a proposal is sent. We consciously think it through before sending a proposed action plan, and when we place the amount, rest assure that’s the number we feel comfortable working with. Reducing this number reduces the incentive for us, which in turn makes the project unappealing, so we simply stay within the framework of an attractive project. Some clients may mistakenly assume they have acquired the web service at a better price, but they have gotten a lower level more basic service, not the Premium one which will set you apart!
So what we do instead to propel a purchasing decision?
We may offer extras to complement the requested web services. We strategically think what services may strengthen the outcome for our clients, and we offer some of those at no extra cost, or at a reduced cost.
While price discounts causes inefficiencies, extras fortifies results of a campaign. Clients are happier. Partnership solidified. Amazingly, the opposite is true when giving in to price discounts.