After several meetings and countless emails about details of an upcoming software project, you have finally crafted an offer. After a while, the client gives you a call and asks if you can build the project for a lower price or provide them with a discount. In some scenarios, they even try to increase the pressure and tell you that they have a cheaper offer from someone else.
What do you do?
Understand their position
First of all, you need to know WHY they are asking for the lower price in general: They ask you because it's their job to do that. It's their job to get the planned software at the lowest price possible, and so they ask you if you can lower your price. That's the easiest way to get something cheaper - by just asking for it. Getting asked for a discount mostly happens if you work with bigger corporations where you negotiate with people who are trained to buy all the things that the corporation needs. It's rarely a money issue - it's mostly just their job to buy things at the lowest price.
The second thing you have to understand is WHAT they are doing with this simple question: They are putting the decision on your shoulders. This is also the reason why it feels so uncomfortable. They force you to think if you can make it cheaper and also send a signal that the whole project could not happen at all. This means that all the work that you've already put into the project to create the offer would be wasted.
While these are the most obvious takeaways, there are a few more that need to be considered before we decide what we do:
- They are negotiating with you because you can deliver a solution to their problem. You can build something that they need and that will take their company forward.
- Likely, they are also talking to you because you made the best offer. If someone else would have made a better one, they would talk to them in the first place.
Let them make the decision
With all this in mind, you can comfortably tell them that you can't build this software at a lower price and that you don't lower your rates in general. You came up with your price for a reason and it makes no sense to change them during a negotiation as long as the scope doesn't change.
This puts the decision back on their shoulders and they have to decide if they want your product or look for a new supplier. Getting a new supplier and go through the whole process of getting an offer again is quite expensive and takes a lot of time - so they will try to avoid that in most cases.
You've also put a lot of thoughts into your proposal and didn't pick a price out of the blue. It's not a random value, it's the result of your thoughts and estimates.
Also keep in mind that if you lower your price in the first place and give them a discount, they will keep asking for a lower one until you say no - so it's ok to say no directly. If you give them the discount, they expect the same one for all new projects in the future.
There are three key takeaways for your negotiations:
- Do not lower your price and do not give discounts
- It's their job to ask for a lower price
- As long as they are talking to you, you are their preferred supplier
There are situations where your clients don't have the budget for the project or don't want to work with you because your daily rates are too high. Follow me on Twitter to get notified when I publish articles about handling these situations.
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