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Discounts in proposals: to do or not to do?

“The proposal looks good, but I'm afraid the price is a bit above our budget. Can we have a little talk about that?” We all experience it and may have asked for a discount ourselves. A discount in proposals is often a discussion point. That's why we've listed the most important pros and cons for you. Just to think about, to keep them in the light when making a proposal or as a handy tool for negotiation.

Discounts in proposals

Get a discount and what it does to you

First, let's see what getting a discount does to us. Whether we shop or review a proposal, we are simply sensitive to psychological smarts that make products or services seem cheaper and more attractive. A good example of this is the decimal decimal numbers. Everyone knows it doesn't matter whether you have to pay €100 or €99.99. That's not what it's about either. The point is that the 9's makes it feel like a discount and (as many research can tell you) successfully. These kinds of tricks and other influencing techniques such as scarcity and Fear Of Missing Out (FOMO) continue to work in our brain. We sometimes see that in proposals. Think of: “There are still 3 spots available or Limited edition and When you approve the proposal within 3 business days, you will receive a one-time introductory discount of...”.

According to Paul MacLean (neuroscientist) theory, the human brain is the result of a long evolution. He names three brains: the reptile brain, the mammalian brain and the human brain. The reptile and mammalian brain together make you react instinctively. The majority (!) of our brain therefore responds purely to feelings and emotions. In other words, of all the decisions we make one day, only 5% are made consciously. Now that we know this, you may be inclined to always discounted your proposals. But now let's take a look at what the positive and negative effects of discounting can be.

The benefits of discounting

There are situations where discounting results in extra profit. Just watch:

  • With a discount, you can finally add that fervent potential client to your portfolio. This can also convince other potential clients to talk to you.
  • Do you have too much of certain articles? Or is the occupancy rate of your hotel or training too low? Then it can be a lucrative idea to offer it at a discount.
  • You want to create returning customers.
  • You bet on the idea of reciprocity. You give a discount that makes the other person feel unconsciously obliged to give back.
  • You give a discount in exchange for, for example, an early payment. You're trading it for something to your advantage.

The Disadvantages of Discounting

At least be careful about discounting. The following drawbacks prove this:

  • You will become a thief of your own wallet if the discount comes at the expense of your profits.
  • Potential customers and clients sometimes also interpret discount as 'cheap is expensive' or 'if you pay peanuts, you get monkeys'. The last thing you want is to be associated with poor quality.
  • There are also prospects who don't trust a (high) discount. They fear a snag and hook off as a precaution.
  • Discounting puts you in a weak negotiating position. Customers and prospects can take advantage of that. They can compete against the competitors or see how far they can go to get even more discount. Now and at later proposals.

What is wisdom

As you can see, there are pros and cons when it comes to discounting. The best advice I've ever received is: “stay on the ground with both legs and use common sense.” 3 more advice.

1) Be ahead of the customer or client by indicating in your proposal that you have issued a rate as competitive as possible or offer multiple choices. People just like something to choose. Discount then does not come to their mind at all.

2) Be clear in what you do. Never just give away anything. Justify your discount and explain to the customer or client that this is, for example, a one-time introductory discount. Feel free to connect a validity limit to it as well. This way, you don't create expectations for the next assignment or order.

3) Finally, of course, you don't necessarily have to express a discount in money. Instead, you can also work with a guarantee or a voucher. So give a discount when you get something else in return.

Gabriëlle de Sain

Gabriëlle de Sain

Monday, December 6, 2021 - Sales


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