Valid Times to Charge Less

November 15, 2010 — Leave a comment

Is there ever a time to charge less?  In fact there is…

(Remember Crazy Eddie? – funny, but the wrong approach for your company.)

1. If a company’s terms put payment way out there, often a discount for upfront payment is warranted.  While speaker’s fees generally are prepaid, consulting fees are not.  Using a fixed fee model allows you to invoice early, and many companies actually have a policy to accept early teams with a 10% discount.  An added benefit comes in that the project is much less likely to be downsized or canceled when fees are prepaid.

2. Subcontractor work or business where you are no the front line seller can also be discounted since there is little cost of sale, and possibly less or no commission being paid.

3. Certain referral sales may also be discounted since your prospecting time is low.

Note: Challenging economic times are not justification for discounts.  Instead, figure out what value is needed to move people, and find things to do that justify themselves based on value.

Finally, should you do something for free?  Yes.  I’d rather do work at full price, tossing in some pro bono work when called for, than discount across the board.  As I have mentioned, once you start discounting, your street price goes down and cannot be regained.  On the other hand, if a client is in desperation or you have enormous competitive pressure while entering a new market, pro bono work can be performed without creating a long term expectation.  Bottom line, you control pro bono work, discounts control you.

© 2010, David Stelzl

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