The Dark Side of Discounting Your Fees

The Dark Side of Discounting Your Fees

What’s the cost?

During tough times, clients like bargains and discounts, but they also like quality and certainty.  Many clients have come to expect discounts as a “new” part of the sales process and have no trouble asking for them.  Your potential clients may be nervous, tightening their spending and shopping around for the best price, but selling on price alone comes at a cost.  There is a dark side of discounting your fees.

There’s no doubt that discounting could provide you with a quick profit and occasionally improve overall sales. Discounting might help to win business and attract new clients in the short-term, but from a strategic perspective it can have a negative impact on your service. It’s important to consider the potential consequences of slashing your prices. This can lead to encouraging clients to ask for discounts every time they engage your services.

Every industry is becoming more competitive and your clients are taking a closer look at what your competitors have to offer.  Is the new low-price competition stealing your customers away?  The most challenging problem attorneys struggle with in today’s economy is how to defeat the competition without slashing your prices.

Part of your ongoing battle with competitors is on pricing. They lower their prices, and you feel forced to keep up with them and lower yours. There are different strategies involved in pricing that don’t always involve cutting prices, but they do involve being more competitive.

Discounting seems so innocent; but it can be tragic to your bottom line. What seems like a minor concession in order to win business often has serious consequences for your firm. Lowering your prices weakens your business, stunts its growth and makes it more exposed to an attack by your competition. There is nothing stopping attorneys who choose to compete on price. You can always lower your price and close a few sales. But at what cost? If you want to sell more services, more profitably, to more people, you must resist the temptation to discount and begin focusing on value.

Instead of discounting, learn to create value for your client so they don’t feel like they have to ask for discounts. After all, your willingness to give a discount may send a message that you don’t think the value is there. But if you must discount, get something of equal or greater value in return; perhaps a larger order, an accelerated payment schedule or some other concession.

While discounting may be appropriate for some firms, the concept should be carefully considered for its effects on your practice. Using alternatives to discounting will be more beneficial for your business growth over the long term. Consider which strategies will be the most effective for your practice and business niche. Ensure that your business is offering the best products available in its field or industry so that you can demand the appropriate pricing for the value.

Most clients who demand a lower price have not recognized the unique value that your solution offers.  If today’s clients are to pay more, they must get more.  You defeat your competition by getting the best possible match between the strengths of your offering and your clients’ needs.

To attract and gain new clients, you need something dynamic and memorable to set yourself apart and not fall into the price trap. If you think of yourself as offering a solution to a problem rather than offering the cheapest price, then you’re well on your way to succeeding in sales and in your business.