It's a sticky situation that most of us have experienced. The potential customer on the other end of the line has just made a plea for a discount. Your workload is fairly light and you want the business. Do you offer a discount or not?

Do You Really Want This Client?

More often than not, clients who start out haggling over price and trying to "grind you down" over fees will ALWAYS want a discount. When you give in and offer them a discounted price, you are doing just as much work for less money. In my experience, the people who are most concerned about the price rarely feel they are getting what they paid for and are difficult to satisfy. You often end up giving more to the people who are paying the least!

Another thing to consider is that when you discount your services, many people assume you must have been gouging them in the first place, otherwise you couldn't afford to discount!

Knowledge-based services are a tricky thing to sell, because you are selling your expertise. Don't sell yourself short!

Here are a couple of strategies for dealing with bargain hunters:

"Sorry, We Don't Offer Discounts."

This is the stand to take when:

• You are already turning down business.
• The project is complex and likely to expand.
• They really want you to do the work.

Explain to the customer that you simply don't offer discounts. You are selling your time more than anything else, and you have a limited supply. Many clients feel they ought to ask for a discount, just in case. When told no, most will still retain your services.

Often however, there is a guilt card thrown in, such as when it's a church, school, or charity with no budget. If that's the case, try this:

"Please Apply for Our Community Service Program."

Set a specific number of projects you will handle for deserving organizations. Create an application and a timeline.

A sample plan:

• 4 charitable projects a year for half price or some other discount.
• Applications are accepted quarterly.
• Use each new charitable project as an opportunity to send a press release to the local and online media.

Your company accepts the applications and selects the ones that will bring the most exposure and meet other criteria, such as a cause that touches the owner personally. You set the timelines according to current workloads and utilize downtime by building your image and helping out a good cause.

A charitable project program shows that you aren't just a heartless mercenary out to make as much money as possible, but in fact a dedicated member of the community with an organized outreach program to give back.

It allows YOU to choose the programs that make sense for you to donate to, and prevents you from having to make snap judgments while under pressure from a client.

Offer Something Extra

"I can't offer a discount but I can add a directory submission program for free."

Take a hint from the cosmetic companies -- they don't get into pricing battles amongst themselves. They fight it out with extravagant gifts with purchase. For a $20 purchase, you get a free gift worth $50! Who wouldn't buy?

This strategy keeps you from eroding the value of your services through discounting while offering clients a reason to choose your service instead of a competitor's.

Consider separating your services into an a la carte menu: you can add on additional services that don't take much time (or might normally be included) at no extra cost. By setting a dollar value for each service you provide (as opposed to a flat fee for "optimization") you can create "packages" of services that include some specific items for "free."

"But Your Competitor Is $300 Less..."

Whatever you do, DON'T start badmouthing your competitors. And don't give in to this tactic. A higher price can actually work to your advantage. Simply state the facts -- whatever it is that makes you different and better.

• We've been successfully optimizing websites since 199x.
• Our service has a proven record; feel free to contact our clients for a referral.
• Optimization is a knowledge-based service. We are confident our service is well worth the fees.
• Company ABC will probably do a fine job for you, if your budget is limited.

Why would you recommend they call the other company? Well, if they really wanted to hire company ABC, they would have already done it! Instead, they are calling you back to try to get you to meet the other's prices...because they want to hire YOU, not them.

Many will call your bluff and hang up to call the competitor. More often than not, they'll call back and book you. If they really are shopping based on price alone, they'll book the competitor and leave you free to work with other clients.

Be Prepared

Sometimes a discount is appropriate and makes sense, other times you just need to be able to turn the request to your advantage. However you decide to handle discount requests, be prepared with a ready answer before they ask. It will prevent you from getting into projects that aren't profitable while ensuring that you get to work with clients who appreciate the value of your skills.

This article originally appeared in the High Rankings newsletter.