The Downside of Discounting (and what to do instead)

alternatives to discounts

“How low can you go?” is a chant that I only ever want to hear while beach-side, surrounded by tiki lamps, playing an ultra-competitive game of limbo.

The last place I want to hear it is in business. Especially your business.

While the visual representation of ‘bending over backwards’ for your clients and customers may be difficult to resist (and frankly, anyone picturing me actually doing the limbo is bound to be on the floor in the giggles right now…) competing on price in your business is no laughing matter. In fact, it pretty much means you’re doomed.

Carving out a place for yourself in the market by having low pricing is a losing proposition for a few reasons.

1.     Diminishing returns.

Landing a new client or seeing a new order ping your inbox are moments for celebration. Except for when you’re earning so little from each new client that it’s not really worth your while. Dropping your pricing to compete in your market leads to a whole lot of resentment – rather than enthusiasm – for those new sales.

2.     Not sustainable.

Sure, the occasional 20% discount to celebrate a launch, or a business anniversary is fine. But if you’re shaving a few points off of your pricing each and every month in order to try and keep up with where you think your market is headed, you’re headed for trouble.

3.     Industry impact.

Beyond impacting your profitability and business health, leading with price savings will also damage your industry. By dropping your prices, you’ll make it harder for others to earn enough on their work. All of a sudden, everyone is trying to make a living selling custom web design for $100, rather than the $5000+ it should be…no one wins there.

4.     Branding troubles.

Do you really want to be the ‘everything for a buck’ equivalent for your field? How does that fit with your branding? Heck – how does that make you feel about the work you do and the experience you’re bringing to the table? If you’re making a habit of reducing prices to stay ahead, don’t be surprised if the clients you attract start caring a whole lot more about getting a good deal, than receiving high quality work.



Even if you’ve started down the discount path, it’s not too late to get back on track. Here are two ways to shift strategy from price, to value.

1.     Start at the beginning.

It’s hard to slip into competing on price when everything about your product or service screams High Value. Focus on creating packages and solutions for your ideal customers that are pumped full of value: solid processes, high engagement, tangible results and real relationships. You’re going to be so proud of the magic you’re making for clients that the thought of slashing your price will give you heartburn. So you won’t.

2.     Support your position.

Now that you have a High Value offering…keep it that way! Question: How many sales does Louis Vuitton run each year? How about Hermes? Exactly none. Because discounting your price teaches the market that you’re not really worth as much as you’re asking at full price. If you’re looking for a way to create an incentive for people to buy, focus on adding in bonus materials or services to bump UP the value instead.

3.     Stand firm.

From time to time, a potential client will respond to your proposal or quotation with something along the lines of “[your competitor] is only charging me $500, so that’s what I can pay you.” It can be tempting to drop your price so that you can snag the client…but resist.

You’re going to handle this in two steps.

Step One: Make sure they’re comparing apples to apples by reviewing what’s included in your proposal, highlighting how each element you’ll be addressing is going to help them.

Step Two:  If they’re still holding out for a price-match, focus on communicating your value. This is a nice way of sending the message that they’re gonna get what they pay for whether they go with the inexpensive option, or yours. Share a great client result, showcase a piece of your portfolio that blew their mind during your consult. Walk them through the process (again) so they know how much attention they’ll be getting from you if they hire you.

And if they don’t? They weren’t meant to be your client anyway…and now you’ve got a sweet spot in your schedule available for someone who’ll jump at the chance to work with you.