How to Say No to a Customer Asking for a Discount + 3 Reasons Why You Say No
A customer’s request for a discount is often a one-way concession. They take but don’t give. But for busy salespeople trying to meet sales goals, this may look like a quick way to win more business.
Although giving discounts can be beneficial in the short term, it isn’t a sustainable sales strategy—and it can kill your company.
How? Let’s ignore the obvious impact on your bottom line and concentrate on the reputation of an easily-discounted product.
Does it appear more valuable? Research says no. Customers associate high prices with high quality. If you start down the path of discounts to make a quick buck, it can be hard to turn back.
We all want happy customers. But it shouldn’t come at any price.
So, how do you say no to a customer asking for a discount without ruining the customer relationship? Let’s discuss.
7 Ways to Say No to a Discount Request
Saying no to a customer’s discount request without being straight-up negative is a delicate balance. The key is to reduce that feeling of rejection by delivering the “no” in a positive way—without damaging the customer experience.
So, how can you do it without losing a potential customer? Here are seven ways to engage the prospect in a conversation that convinces them of your value.
1. Ask about Their Priorities + Motivation
Many small business owners fold too soon. When a prospect requests a discount, they email back a coupon. Now, there’s nothing wrong with incentivizing first-time customers. But, one of the key steps in any robust sales process is understanding your customer’s needs. You want to research and establish the needs, goals, and pain points of the prospect so you can sell effectively—and strengthen your value proposition.
Did the prospect ask for the discount early on? Then, ask them to share what exactly they’re looking for in your offering that made them request a discount.
2. Uncover the Value Gap in the Sale
Your customers want to extract the most value while paying the least amount of money. Why not negotiate by asking something like: “What additional value can we provide that will make our solution worth the cost?”
With this question, you can discover any gaps in the perceived value of your product and present a personalized value proposition that addresses their needs.
If you can clearly demonstrate the value of your product, throw in some add-ons, or offer amazing customer support, the prospect may be willing to pay at your initial price point. Or, sometimes, you just need to get them signed up for a free trial of your solution—they’ll explore the features, and fall in love.
Here’s a social media exchange that demonstrates how you can nudge prospects to sign up for a free trial:
“Hey [Prospect’s name],
Thanks for your interest in our product. We understand you want a discount on your order, and we deeply value your business. Unfortunately, we can’t offer a discount at this time.
Is there any additional value or functionality we can provide that would make our solution worth the quoted cost?
If you like, we can schedule a call to discuss your needs. I’m confident we can find some common ground.”
3. Discover If Price Is the Decision-making Barrier
As soon as your prospect hears your pricing, they ask for a discount. Maybe they are short on money. Or, they don’t see the value of your solution at the quoted price. Every sales objection could be hidden behind such a price objection.
So, ask them: “Is price a huge barrier in the final purchasing decision?”
If they say pricing is not a big problem, show them the value in your offer. If it is, consider offering a monthly pricing plan (covered next). But, if your pricing is way too high, they probably aren’t a good fit.
“Hey [Prospect’s name],
We understand you’re asking for a discount on our solution, and we'd like to know if price is a major barrier to your final decision.
If you’re operating on a tight budget, we’d like to collaborate and find a solution that works for you.”
4. Offer a Month-to-Month Financial Plan
“Would a month-to-month plan be enough to get you to close today?” It’s a clever little workaround that can help you avoid giving discounts. Your prospect will experience the value of your solution first-hand, and if they like it, you may be able to get them into an annual contract later on.
These monthly deals work best for prospects that don’t have the money to pay upfront, but resemble your ideal customer profile. Monthly payment plans can be priced about 10 to 20 percent higher than annual ones.
Some sales teams may not be able to offer month-to-month plans because of their company’s policy. But if you can, it can help you close deals at full price and retain profit margins.
“Hey [Prospect’s name],
I appreciate your interest in our product and I understand that committing to an annual payment plan might be challenging for you right now. So, I’d like to offer you a customized arrangement that works better for your budget.
With our month-to-month payment plan, you can expect:
(State pricing and benefits.)
Please contact me if you have any questions, concerns, or would like to discuss the terms.”
5. Turn the Question on the Customer
Try turning the tables on your prospect to uncover their objections. By asking specific questions, you can get to the bottom of the pricing concerns. For example:
- “What were you looking to pay?”
- “Are you saying you can’t afford to continue paying the cost of the problem? Or, you can’t afford the solution?”
Asking these questions will reveal if the prospect has bought into the value of your solution—or not. Maybe they don’t even understand their own pain points completely! Or, maybe your product is simply out of their budget.
If they aren’t sold on your value, you have to research your prospects better, and position your product as an investment—not a money pit.
Here’s Close CEO Steli Efti sharing his thoughts on the subject:
If your prospect doesn’t have the money but seems like a great fit, you can consider structuring a deal for them, using these other tips, to ultimately complete the sale.
6. Offer a Quid Pro Quo “Discount”
Effective negotiations seek a middle ground that works for both parties: seller and buyer. So, rather than offering discounted prices, your sales team can take a quid pro quo approach.
Say something like: “I can give you a discount on the highest pricing tier if you buy at least five seats.” Or, you could ask them to be the subject of a case study seeking customer feedback, or request referrals in their network.
Ultimately, you want to get (likely non-monetary) benefits out of the deal for yourself, so you can strike a win-win that benefits both parties.
“Hey [Prospect’s name],
I appreciate your interest in our solution and I understand you want to get the best value for your money. We always strive for competitive pricing, but I would like to offer you a unique opportunity.
This quid pro quo arrangement goes beyond a simple price reduction. Here's how it works:
(Set your terms.)
This pricing strategy will help you experience the full value of our solution while also helping us reach our company goals.
What are your thoughts?”
7. Deny—but Don’t Close the Door
Sometimes, your prospect is enthusiastic about your product, but they just don’t have the budget to buy it. Don’t deny their request with a direct no.
Instead, ask them: “How about we reconnect next quarter? Do you think you’ll have more of a budget then?”
“Dear [Prospect's name],
Thank you for reaching out about your interest in our solution! While we totally understand budget concerns, unfortunately we aren’t currently able to meet your specific discount request.
Our pricing reflects the value we offer—including the experience, reliability, and results that our customers get with our solution.
However, we value your interest, and would like to revisit the possibility of working together in the future, when your budget allows.
Could I reach out next quarter to see how things are going?”
Ideally, you want to exhaust the options discussed above before resorting to this last one.
3 Issues with Granting Customer Requests for Discounts
Discounts may ultimately damage customer satisfaction—rather than benefiting your business. Your brand reputation can be sullied by “cheapness.” And the type of customer you attract? Less than ideal.
Let’s look at three more reasons why discounts are a bad idea.
1. Discounted Customers Churn More Often
While discounts can incentivize prospects to buy, improving your short-term bottom line, those benefits hurt your company long-term. The new customers you get through discounts have inferior retention rates. Their unwillingness to pay full-price also translates into a higher churn rate and decreased lifetime value—these aren’t the loyal customers you’re looking for.
2. You Might Destroy Existing Customer Relationships
Let’s say a large account aggressively negotiates a big discount on your solution. Then, a smaller company approaches your sales rep, who says, “This is the best we can do, I can’t go any lower.” At some point, your customers might talk. And when they do, the second customer is going to be pissed.
Plus, consider your ride-or-die loyal customers. If they discover they’re paying full price, while the new kid on the block got 20 percent off? That won’t go over well.
3. You Don’t Know Your Customers' Actual Worth
Discounts make your business unpredictable and unscalable.
Instead of Basic, Pro, and Business plans, where you know how much revenue you make for each, you’ve got Customer A with a 12 percent discount, Customer B with 14 percent, and Customer C with two free user accounts. Good luck forecasting future revenue.
Those discounts are going to undermine your entire financial structure because you don’t know your customers’ actual worth. Plus, it’s going to cause problems for your support team, success team, marketing team, and even product team.
The Big Exception: Enterprise Sales
Discount culture is bad for most companies. But there is one big exception: enterprise sales.
If you’re selling to enterprise customers, you will handle discounts differently. You can’t quote a price and say: “This is what it is.” That’s just not how they work.
Most enterprise companies have a procurement department whose entire job is to get discounts. They have a discount quota to meet, and if you won’t play ball, you can’t close enterprise deals.
That’s the way their organizations are built, so if they’re your ideal customer, you will have to negotiate discounts.
Consider building discounts into your enterprise pricing, or offer tiered packages based on seats, usage, or other premium offerings.
Trying to Win with Discounts? You’ve Already Lost
Having a lower price for the sake of it is a competitive disadvantage. If you don’t value your solution, your customers won’t either.
But, if you feel like you absolutely, 100 percent have to offer some sort of discount, make sure:
- They’re standardized (and don’t budge.)
- You’re getting something equally valuable in return.
Sell your prospects on value first—and make the discount an added bonus. This will strengthen your brand, and set you on the right path for real, sustainable growth.
Handling sales objections—including pricing objections—requires an elevated degree of finesse. Want to upgrade your skills? Grab our free Objection Management resource.
