August 21, 2016

The 9 types of discounts clients ask for

Following are the 9 types of discounts that I compiled from your feedback.

I’ll cover each individually in subsequent “Learn Your Lines” messages, but here’s the overall list with descriptions and some of your examples:

1. How Hard Could It Be?

Client views you as a laborer (or themselves as an expert) and has a hopelessly naive idea of what the work entails.

“It seems all you really need to do is just X. Can you help me understand why you think it’s going to cost that much? I mean, I trust you 100%, but it seems $5000 would be plenty to just X.”

2. We’re Broke

Client claims that they simply don’t have the budget to cover your fee. This could be true, a misconception, or a bluff.

“It’s hard enough for us to make money as it is. Could you do it for $XXX?”

3. Sharpen Your Pencils

Client vaguely implies that you need to lower your price, but without directly asking for a discount.

Right there in the meeting I estimated $400 USD for the work at my usual rate of $20/hr. The response from the client was something like: “Ok... I guess you’ll be sharpening your pencil for us” (Which is a literal translation of an Argentinian expression, I’m not sure it makes much sense in English).

“I need you to sharpen your pencils. Can you do that?”

“That’s higher than I expected, so let’s leave it for now and revisit when we’ve done a few more projects together, and we know it’ll be valuable.”

(JS: I’d never even heard the “sharpen your pencils” euphemism before and yet it was mentioned by two different readers!)

4. Peace, Love, and Happiness

Client implies that since they’re a not-for-profit entity, that you should be too.

“We’re a not for profit organization, do you have a special rate for clients like us?”

5. Pay Your Dues

Client suggests implicitly or explicitly that giving them a discount now will result in some combination of more work, more notoriety, more clients, or more profits at some indeterminate point in the future.

“We were actually hoping to use more of your services in the new year. And we usually get a discount when we buy more of something.”

“If you can lower your price, you’ll have lots of work coming through from us.”

When saying an hourly rate (which I’m working on getting out of my system), I often get people asking if we’d take less if it’s a bigger project.

6. You’re The Most Expensive

Client explicitly states that they have received lower prices from other vendors.

“Your proposal is the most expensive we got but we want to buy from you. What can you do for me XXX?”

“Company X said they would do it for half your rate!”

7. How About We Treat You Like An Employee?

Client tries to entice you into some sort of employment or employment related arrangement.

I’m preparing for a sales call with a prospect in twenty minutes. They’ve already asked, “Would you be interested in the engineering manager position?” Which happens fairly frequently: “We like you, so much in fact, that we’d like to hire you and get all of your time for a whole lot less money.” It’s the ultimate discount ask.

The one I get most often is from startups who ask if I will do the work in exchange for equity or for part equity/part cash.

“Can we pay you with equity?”

8. We’ll Never Get This Through Accounting

Client cites some company policy, cultural attitude, or financial threshold that will cause the project fee or hourly rate to be rejected out of hand.

9. It’s Not Up To Us

Client is reselling your services to another party and wittingly or unwittingly uses your lack of direct contact with the real buyer to their advantage.

Working with vendors and they want a wholesale rate because “they are handling the client.”

I was working through agents, and they said “the client wouldn’t have budget for that.” In one case, the agent said: “the client is going to translate that roadmapping session as a very high daily rate.”

Thanks for all the great stories! Tacking each of these is going to be fun :)



P.S. Hourly Billing Is Nuts, just so you know.