Holding Your Price

One of my subscribers emailed me the other day with a question I get asked all the time. 


"Mark, I've got a potential lead who's interested in my SEO service, but they think my pricing is too high. How much money should I be prepared to discount?"


This is a great question, because it's something that we're instinctively inclined to do incorrectly. 


Human nature and evolution has built us up to generally avoid conflict. It's all linked to the 'fight or flight' response that I'm sure you've heard doctors and scientists talk about many times before. When faced with a situation where we feel confronted or in danger, we make a sub-conscious decision to either stay and fight, or run away, and our body physically prepares us to do that. 


It's the build up of adrenalin that you feel when you trip and almost fall over, or when someone does something that makes you feel uncomfortable. And in a strange way, the same mechanism often kicks in when you're in a sales negotiation conversation, especially if you're the kind of person who doesn't enjoy negotiating. 


The instinct is to 'flight' - to back down and allow the customer whatever kind of discount they want. 


Now I'm not going to get into too much sales psychology here, as this subject could easily (and often does) fill up entire books. But I will say this - Dropping your price too quickly is one of the most damaging things you can do for your business. 


If I offer you something for £200, and you tell me it's too expensive, and I then drop my price to £150, does that suggest that the product was worth £200 in the first place?


No - It suggests that I was 'chancing my arm', in the hope that you would pay it. It suggests that the product was over-priced. And that makes me look like someone who's not to be trusted, and someone who charges too much for their products!


Now with a physical, tangible product, this is actually quite straight forward, because we tend to be more willing to attach a minimum value to something tangible. A car for example, might be worth $2000. I might ask for $2500 when I try and sell it, but if I get offered $1500, I won't sell it. Why? Because it's less than what I've deemed the car to be worth, and therefore not enough money for me to accept. 


With non-tangible products, like an SEO service, we're faced with the problem that the customer believes we can charge whatever we like, and therefore thinks that any price we charge is going to be too high. 


The customer will almost always assume that you're asking price is too much (even if they think it's a bargain!)


So the first thing to remember when being asked to drop your price is this - Don't!


Certainly not at first. 


If you drop your price at the first request, you're de-valuing your service, and you can't ever come back from that. The second you start talking about £150, it's impossible to work your way back to £200. 


So stand your ground! The price is what you quoted, because you've carefully worked out a price that's both fair to you (you are a business after all) whilst still within the reach of the kind of businesses you want to target and good value for money. 


Ask the client why they feel it's too much to spend. Because unless the client is just trying their luck (they almost always are), there's a distinct possibility that your sales pitch isn't up to scratch. 


Because let's face it, if it was, you'd have made the sale! So it may be time to remind the client of the benefits of your service. 


At this stage, most prospects will make a decision. If they were genuinely interested in buying from you in the first place, they will usually just accept that the price is what it is and do the deal with you. 


But if they don't, and the prospect still wants to knock your price down further, you have two options. 


You can stand firm on your price again, selling the benefits and explaining why it's worth your asking price, or you can take a small amount of money off. And when I say small, I mean SMALL! 


Charging £250 for your consultancy services? Offer the client £5 off MAXIMUM. 


Because what happens if you drop to £200? The client realises that you can afford to knock a big old lump off of the price, and will push you further. 


The client might laugh at the notion of knocking such a small amount off, but just stay confident. Why should you drop 1/5 of the price off? Would THEY do that with THEIR products or services? No - Stay firm on your price!


It's much better to knock small chunks off at a time, as you're more likely to defend your price and walk away with a deal that works for you. Plus it takes a LOT longer to go from £250 to £200 in £5 chunks than it does in £50 chunks! 


But here's the kicker. If the client wants a discount, even £5, what are they going to do for you?


You've just taken money off of your product, money out of your pocket - What are you going to get back? 


What's in it for you? This is a negotiation after all, not a 'stock clearance sale'! 


Here's what I recommend. For every £5 off, I want a lead from that client. They know other people in their niche, and they have friends and family in their circles who have their own businesses - I want those names and numbers! 


So if I knock £20 off of my price, that's 4 names and contact details that I can speak to with regard to my business. I can send them an email or give them a call and explain that I'm currently working with 'so and so', and they told me that it would be a good idea to give that new lead a call. 


Now of course there's no guarantee that any of these will convert, but if I can even get my details in front of these people, and use the name of the friend/acquaintance who gave me their details, there's a good chance that I can work with at least one of them. 


Which would be well worth the £20! 


There's lots of options when it comes to holding your price, but it's one of the most important lessons you can possibly learn in this business. Just because you sell a 'service' doesn't mean that you should let people destroy the value of that service! 


Be strong - Hold your price - Make more money!