In our enterprise there will be no loss leaders. As experts, we will not discount with new clients today for the opportunity to make money tomorrow. We will save the use of discounts for our best and longest serving clients at times when they need our support.

Legitimate price negotiations are fair game. If, from time to time, we decide that it makes sense to cut price to win the engagement, we must ensure we never cut so deep as to jeopardize its profitability. By seeing that every engagement is profitable, we ensure that our firm is profitable. By allowing an engagement with a new client to begin unprofitably, we set up what is almost certain to be a relationship of mutual discontent.

Alternatives to Discounting

We may negotiate from time to time, but before we cut price we will ensure we have explored all the alternatives.

Guarantees

Clients may attempt to negotiate because they are unsure of the value of our services. In these situations we can consider guarantees as alternatives to discounting. Not guarantees of return on investment—for too many variables remain out of our control. Not guarantees on our entire spectrum of offerings—for they may be used against us late in the engagement. It is appropriate to guarantee the first phase—diagnosis and prescription—of a phased engagement in order to reassure the client of the value of moving forward with us. There is far less risk in this guarantee than there is in pitching free ideas and hoping to get paid.

Terms

Clients may see the value of our offering but attempt to negotiate based on their inability to pay. In these situations, before we discount we should consider offering favorable terms that let the client pay over time.

Holding Our Ground

Sometimes clients will see our value and will be able to afford us, but will negotiate to get a better price nonetheless. Often, negotiating success in these cases goes to the party most comfortable talking about money. The one with the least emotional baggage on the subject will do better at holding his ground. By following the ninth proclamation (We will address issues of money early), we work to ensure that that party is us.

Two Rules for Discounting

When we have explored the alternatives and still we choose to discount, we will adhere to two rules:

We Leave it to Last

First, we will ensure that cutting price is the last thing we do. We will search for and address all other objections before we agree to discount. In one final sweep before we agree to accept less we will ask, “If we were to agree to this price, is there anything else to stop us from deciding to work together right now?” If no objections or next steps remain, then we can cut our price and take the engagement. If there remain steps to be taken or objections to address, then we will do so before we discount.

We Put it in Writing

Second, we must ensure that such discounts are clearly identified in all written documentation, including contracts, estimates and invoices, in order to remind the client of the true value of our services. Our failure to abide by this rule will almost certainly cost us in the future as the client “forgets” this proper value and references only what he previously paid. By recording our discount in all price documentation in this way, we ensure that such a discount does not set a precedent for new pricing moving forward.