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DON'T DISCOUNT TWICE OR THRICE
By Tom Reilly, author of Value-Added Selling (McGraw-Hill,
2003)
How many times will you discount for your customers?
Think about it this way. First, you discount when you wrap your product in a
bundle of value-added services and do not charge for them. You have discounted
their perceived value to the customer. After all, who attaches value to "free"?
Next, you discount when you literally reduce your price (for the above
value-added services) because you have bowed to competitive pressures or you
have been out-negotiated by the customer.
Third, you discount when you offer the customer payment terms and they take the
terms but may not pay within the prescribed time period. This does happen, you
know. From the customer's perspective, this is winning the trifecta of
discounting.
In military parlance, you don't want to fight for the same ground again. Every
price concession you make is ground you have to make up again as you increase
prices. The only difference is that now you're starting at a lower point to make
it up. You lost the battle the first time. What makes you think the buyer will
concede the second time?
Be stingy with your discounting. Be a protector of your company's profit. Be a
guardian of your margins. And certainly, don't discount the same thing twice or
more.
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