When prospective clients ask for a discount, your response is vital.

Get it right, and they’ll pay the full rate while you set the tone for a positive working relationship.

Get it wrong, and you could lose the client or start the relationship on the wrong foot.

So, in this week’s blog, we’re going to take a deep dive into your options when prospects ask for a discount.

#1. Agree to the discount

Many business experts recommend never agreeing to discounts. However, there might be reasons why you choose to reduce your fees for a specific client. If you do, be aware of the potential downsides:

• Discounting can mean the relationship starts on the wrong foot.
• Asking for a discount is often a red flag that the client might be tricky to deal with in other ways.
• You could create an expectation that future work, including ad hoc jobs or ongoing advice, will also be discounted.
• You risk feeling resentful if the work takes longer than expected, especially if you’re delivering the same service for less money.
• You could create an awkward fairness problem if existing clients, who know the new client, are paying full price for the same service.

If you prefer to take Alex Hormozi’s approach, “It’s either full-price or it’s free. I never discount,” here are a few options for you to consider. Assuming, of course, that you still want to work with the prospect.

#2. Change the scope

If someone wants to pay less, there’s a logic that they should receive less.

That might be possible with an ongoing service. For example, you could agree to meet with the client every two years, rather than annually.

However, it’s not so easy, and potentially impossible, to reduce the scope of the initial work you do for clients.

#3. Ask what they’d like to remove

This is similar to changing the scope.

If a prospect wants to pay less, ask them which parts of the service they’d like to remove. That forces them to think about the value of each element, rather than simply seeing the total fee as something to negotiate.

For example: “I understand you’d like to reduce the fee. Which parts of the work we’ve discussed would you be comfortable removing?”

That question reframes the conversation from “How much can I knock off?” to “What value am I prepared to lose?”

#4. Use humour

Last year, an adviser said to me, “We need to talk about the price”.

His inference was clear; he wanted a discount.

I thought for a second, smiled broadly and said, “Sure, how much more do you want to pay?”

He laughed, and a potentially awkward conversation was avoided.

Here’s a video of Alex Hormozi talking about how he also takes this approach.

#5. Use logic to explain why you don’t discount

If humour isn’t the right approach, using logic might make more sense.

Especially if the request for a discount comes from a misunderstanding about why you charge what you do.

When we’re occasionally asked for a discount, we’ll explain:

• That typical agency profit margins mean discounts would push us into making a loss.
• That the fee we’re quoting is fixed, so if the work takes longer than anticipated, and we’ve also given a discount, that would push us further into a loss-making position.
• Ethically, we’re uncomfortable offering a discount to one client that we don’t offer to others.

You could do the same thing, explaining the time it’ll take to deliver the service for your clients, the benefits of each part, and your business model.

You could also explain how your fee is set at a level that means you can do a great job for your clients. For example, by saying, “We don’t discount because we don’t want to cut corners. The fee allows us to do the work properly and deliver the level of service our clients expect.”

That tells the prospect your price isn’t arbitrary, while reassuring them that the fee allows you to deliver the work properly. You could then prove this by sharing reviews, testimonial videos, or the results from your latest client survey.

#6. Understand why they’re struggling to see value

The people advisers and planners work with typically have large, or relatively large, sums of investable assets. So they have the money to pay your fees.

That means affordability usually isn’t the problem. Seeing the value is.

So, instead of defending the fee, take them back to the reason they contacted you in the first place. For example: “Before we talk about the fee, can we go back to what you told me you wanted to achieve?”

Then remind them of the trigger: retiring sooner, reducing tax, selling their business, protecting their family, feeling confident they won’t run out of money, and so on.

The fee should be judged against the value of solving the problem, not in isolation.

#7. Be prepared to walk away

Not every prospect should become a client. There’s also an argument that if you’re not getting knocked back occasionally on price, your fees are too low.  And if someone is pushing hard for a discount before the relationship has even started, that might tell you something useful.

So another option is to politely hold your ground. For example: “I completely understand why you’re asking, but we don’t discount our fees. We’ve priced the work fairly based on the time, expertise, and value involved. If that doesn’t work for you, no problem at all.”

That might feel uncomfortable.

But sometimes the best client is the one you don’t take on.

One size doesn’t fit all

If a prospect asks for a discount, and assuming you don’t want to agree, it isn’t wise to always use the same approach.

Humour will work with some, while others might be more open to a logical response.

So match your approach to the prospect, using the one you think will be most effective.

For a second opinion, click here to rewatch our 2024 webinar with the fantastic Andy Bounds. As you’d expect from the UK’s Sales Trainer of the Year, he generously shares some brilliant, tried-and-tested ways of handling discount conversations.

Prevention is better than a cure

In next week’s article, we’ll look at some of the things you can do on your website and your wider marketing to reduce the chances of prospects asking for discounts.

In the meantime, if you have a different approach to “discount terrorists”, email it to me, phil@theyardstickagency.co.uk. I’d love to hear it.