Startups: How To Get New Clients Without Discounting
You’ve got your new startup ready to go. Maybe you’re providing a great service to a specific type of business client. Maybe you have an app that will help businesses with a task they need to perform.
You may have a few clients, but you want more. So you start getting inquiries and you start reaching out to potential clients. Then you discuss price and the first thing that happens is the person starts asking about discounts.
This is enough to drive you crazy. These discussions can be about leverage and as a startup you may think that you don’t much leverage. I still feel this way from time to time. I try to avoid it, but it happens and it seems to happen the younger your business is.
I’ve talked to people in business to see what they do in situations like this. You don’t want to lose the potential new business, but you also don’t want to start discounting your price. That can be a slippery slope.
So here are some strategies I’ve learned about dealing with pricing and getting new clients.
1. Make Sure Your Pricing Is Sound
Pricing is tricky when you’re starting out, but there are ways you can make sure the price you have is sound. With time you’ll find a sweet spot, but starting out you can look at the industry. Even if you think you’re the only one that’s doing what you do there are still probably at least a few companies doing what you do. See what they’re charging. Send them an email asking about price if you have to.
You can also look at comparative pricing. If you help businesses generate traffic through social media, for example, you could compare your service to what a business would pay for the same traffic from pay-per-click advertising.
And you always want to look at your own margins. You have to leave meat on the bone so you can do business and make a good living.
2. Stand Strong
The first rule when someone starts asking for discounts is to stand strong. It often happens that they’re asking just to see if they can get a better deal. And many times they can simply by asking. But by telling them that you don’t offer discounts they likely will chalk it up to being fine and the discussion moves forward.
So stand strong on your price. You don’t have to go into detail about it unless they ask. Say that it’s a competitive price for what they’re getting and move the discussion on.
3. Find Lower-Priced Options
If you get more than a few potential customers pushing for a low price you can start looking at a lower price package. Maybe your price and service are a level up for some customers. You can get a few customers for what your price is, but to get a different set a new package might be necessary.
For example, if someone comes to GBW and doesn’t want to pay the price for a regular post I’ll suggest that we have shorter posts with a lower price. This way it’s not really a discount. It’s simply a different package that can accommodate the budget of the new customer.
And at some point you may find that some potential customers just aren’t right for what you’re offering. If they can’t come around on the price then they might never come around and you’re best moving on to someone that will see the value. Or you can change your approach to show more value in what you’re offering making it easier for your customers to pay the full price.
Customers are generally very happy to pay for something when they get more value than what they’re paying. If your customers are businesses then if you’re helping them make profit they’ll pay your price. So think about it that way.
And don’t think that a price is set in stone especially when you’re starting out. But I do think the tendency is to under-price yourself early on when you’re a startup. Come back to the price every once in a while. Use your experience. Get feedback from your current customers. Look at the competition and look at your profit statements. Make changes when you need to and use the tips above to avoid the Slippery Slope Of Discounting.