August 20, 2016

Some surprising angles re client discounts

When I asked y’all to share stories about clients pressuring you for discounts, I was thinking of a particular scenario:

You quote a fixed price for a software project proposal and the client pressures you for a discount.

I did get a fair number of stories about that scenario, but also stories on a few other unexpected ones:

• Requests for a lower hourly rate in general across all projects/tasks
• Requests for a discount after work has been completed (aka “eating hours”)
• Objections from an intermediary (e.g., doing client work through an agency)
• Offers of full-time employment or equity in lieu of payment

These are all significantly different situations that I’ll tackle individually in a series of messages.

But before I get to that, here are a few cautionary tales about giving discounts...

There was the one time that I was writing medical articles for a client, and charging hourly. They asked for a discount on my rate initially and I gave it to them. I had just lost a big client to bankruptcy and was feeling the pinch (read: desperate). I said yes. What ensued thereafter was nothing short of horrific. Phone calls to explain why this article took this long that month and that long this month, etc. It was all very bad and I know that by lowering my rate, I contributed to it. I showed them that I wasn’t valuable. And they went on to treat me accordingly.

The last time I gave a discount was for a code assessment. It turned into a bit of a nightmare of endless questions after that. I didn’t have much else going on at the time so I took it knowing it would probably be an issue. It really does destroy the trust when you throw the price out there and are perfectly willing to do the same thing for less money.

A few years ago, we had a client that we were going to be taking over the maintenance of a Rails project for. We were billing hourly and our rate was $100/hr at the time. The client said he was willing to pay that now, but that since we’d be getting a lot of business from them, would we be willing to take $80/hr? We pushed back and we’re glad we did. We ended up firing the client 6 months later, but re-engaged with them after our contact left as a project manager — raised our rate and have a much better relationship.

I always think if someone asks for a discount - “what are they willing to give in return?” It’s never a deal breaker, but they have to give me something in return. And it has to be an amazing fit too - otherwise, forget it.

Yours, 

—J

P.S. Have I mentioned that Hourly Billing Is Nuts? Someone should write a book about that...

BackRandomNext