How do you handle clients asking for a discount?

Originally Posted by Robson That's very professional of you root.....I doubt that will do many favours for you.

I never said I was professional.

This is another one of those huge misconceptions freelancers of all types have that get them into trouble more times than not. When freelancing, it's generally not a good idea to give discounts. You set a rate that you feel your work is deserving of, then you need to stick to it. The only exceptions should ever be non-profit organizations or people you know personally (and even then you need to have a set % discount, and have that stated up front - don't offer more to anyone). The general problem is that most freelancers don't have what it takes to negotiate fees properly. They get stuck in the mind frame that if they don't offer the discount, they won't get the work. That's simply not true. Being the cheapest will not win you the biggest playing clients! If you demonstrate that you don't value your time, you won't get hired by the people w/ the deeper pockets on a regular basis. This is a great example of value-based pricing - something I just recently brought up in another thread w/ some resources to check out. Here's the best solution:

If you charge $500 for a standard web site design, and a client comes to you, tells you what they want, you say you can do that, and then they say they only want to pay you $400 or some other amount ... you shouldn't just agree to it for the sake of having a client. You need to say, "I can do the specific project we discussed for $500. If your budget only allows $400 for a design, let's see if we can find a way to alter the design in a way that I can provide you with the service for $400 and the design will still meet all of your needs." If they want less of a price, then you need to give them less of a service accordingly. The key is to find a way that can still meet their objectives, but with work that you can do in less time, which will account for the decreased cost.

Taking a project at a discount because you're hoping for (or even promised) more work from the client is the wrong way to go. Why? Because that client is very likely to expect discounts EVERY time they hire you (assuming they actually hire you again at all), if you get referrals from that client, they're likely to tell the referrals about their discount, and most freelancers never set their rates appropriately in the first place (allowing enough to cover the hours they need to spend on administrative and marketing efforts) so they're already taking a hit. To be a successful freelancer you need to be a successful business person. If you don't understand the basics of supply and demand, budgeting, and simply have a professional attitude, you're not that likely to bring in the income you'd need to make a full-time go of it.

i definitely agree with JH's comment on the budget, and project, and finding alternate means if they cant afford it.

I think that if they can offer something in return, to cover the costs of the discount, then it works out. For instance, advertising, etc. That is also to the designer's discretion if they believe that the project they are working on will garner up the correct amount of hits.

That's another great point. Allowing for a barter of services for advertising (or whatever else the client has of value to you) is another way of making sure they can control their costs, while you're protecting your own value.

Originally Posted by Julian You should always consider the possibility of giving discounts, say 10% of a $30 banner is only $3, it's not much to you to lose and could get you a lot more repeat sales if done properly. I know you are operating on low margins with small jobs but you should always consider discounts to the right people.

What sort of money are we talking about here Robson?

I know I answered this previously but I feel with some of the additional comments I need to state my reasoning more clearly.

Bennett, if you give discounts to certain clients then others will ask for them is always a possibility. So what?, deal with each request separately and professionally. And remember that loyalty goes two ways.

In my statement I have said you should always consider the possibility of giving discounts. I never said you should always discount clients when asked.

If you discount someone it can give you repeat sales in the future. I know some of you think that if you discount someone then they'll tell their friends who will want a discount...and if your loyal clients get wind of it they will also want a discount and you'll end up losing loads of money in discounting loads of clients....think about this carefully!, each person has either referred friends for discounts or existing clients have requested more work at a discounted price...this equals more work!!!!!

More work equals more volume which in turn equals more money!!! The discount also can have a viral marketing effect, once people find out you reward them with discounts then they tell others and so on.

If you don't believe that you can afford to lose a measly 5-10% or so on a project then you are way undervalueing yourself. If your client gets a discount then they are always impressed, especially if you offer it before they even askfor one!!!

All of our work is aimed at giving exceptional client service, doing above and beyond the required tasks for a fair price. If you can discount on top of that then your clients are always going to come back for more, or refer others to your services.

Don't be short-sighted and believe for one minute that discounting is going to make you lose money, it will make you a lot more money in the long run!

Think about shop stores, they have very regular discounted specials, this enables them to put through more product at a lower price, and the increased volume vastly counters the discounted prices.

Originally Posted by Julian Don't be short-sighted and believe for one minute that discounting is going to make you lose money, it will make you a lot more money in the long run! Think about shop stores, they have very regular discounted specials, this enables them to put through more product at a lower price, and the increased volume vastly counters the discounted prices.

Julian, the problem with your reasoning is that you really are the exception in this case. For the majority of freelancers, discounting not only DOES lose them money in the long-run, but it actually forces them out of business, because they're never able to pull themselves out of the rut they dig themselves into. And I'm not just talking about designers here. I'm fortunate enough to be able to communicate with and work with some of the top consultants in the world, in fields ranging from IT work, Management consulting, Marketing ... freelancers all across the board. It's not just an industry problem, it's a universal one. On this topic, I generally like to refer people to Michael McLaughlin's articles, as he's a top and very well-respected consultant who's been there. This article focuses mostly on an hourly rate structure, but he goes a little bit more specifically into this subject under the heading "Client Relationships Can go Bad." http://consulting.about.com/od/finan...ourlyrates.htm

Also, you absolutely can't compare a freelancer's work to shops that run sales. I've worked in retail advertising, managing those sales, so I know the numbers. Retailers purchase things relatively inexpensively, then mark up their prices by 100%-1000% or even more. If you knew how little they spent, it would disgust most of you at how much you're being charged. So for them to give a 30% discount on merchandise or even more is NOTHING to them, when they've marked it up. They're still able to realize huge profits, while the shopper thinks they're getting a good deal. So in that case, yes, it increases sales volume and profits.

That is NOT the case for most freelancers. The reason I say you're the exception is that you likely know the value of your work and you charge accordingly for it. I remember you posting in another thread that $25 would buy a 15-minute consultation with you. So that factors out to $100/hour. If you keep your overhead relatively low, and have a rather steady flow of incoming work, you're not likely to see a problem w/ offering a discount. You were right when you mentioned people undervaluing their work though. That's exactly the problem that can't be ignored. Here's an example of what commonly happens, using a designer as an example: You may work at as a designer for a firm, and they pay you $25/hr. However, they're actually billing their clients $100/hr for the work that you do. So your work has a value at $100/hr. The designer decides they want to freelance. What they should do is charge what they're worth - $100/hr (maybe a little bit less, factoring in the firm's own mark-ups to cover their larger overhead) - so let's even say $75/hr. But in reality, most freelancers make the mistake of charging far too low to start with - in this case let's say they only charge $25/hr, figuring that's what they made at the firm, so that's what they're worth, and they're going to be making enough to get by on. The complete fallacy with that is they far too often forget that they can't base their rates on 40 hours/week that they may have been paid for at a firm. They can only bill an average of 22-23 hours per week, w/ the rest of their time being spent on admin and marketing work. They need to account for being paid for that time too, in addition to covering any overhead costs they may have, and still manage to realize a profit. Most freelancers simply don't do that. So, like I said, you're right in saying that they undervalue their work, but your theory that more work equals more volume which equals more money simply isn't true for the vast majority of freelancers.

I don't think the real issue here is whether to give discounts to clients when they ask for them. I think the real issue is that some of the more experienced freelancers here should be trying to help the younger ones understand how to value their work and set prices appropriately in the first place. Once that's been established, you WILL have some negotiating room with your rates, as long as you're responsible enough to consider all of the possibly negative results as well as the positive. Never just jump to say yeah, I'll give you a discount, b/c you're simply afraid of losing the work. You should be busy marketing yourself towards potential clients who value your work accordingly in the first place.

Such a great debate by two highly qualified professionals.

Originally Posted by oneimedia Such a great debate by two highly qualified professionals.

I always love a good debate.

Overall, I think that both Julian and myself simply want to make sure that all of the facts are laid out there so that everyone reading this w/ any interest in the subject can make better-informed decisions. And having an open resource like TalkFreelance is really just a great way to go about sharing our input and experiences to help people do just that.

i personaly think my prices are much to cheap for a discount.. although my prices will rise very very soon.

Originally Posted by jhmattern I always love a good debate. Overall, I think that both Julian and myself simply want to make sure that all of the facts are laid out there so that everyone reading this w/ any interest in the subject can make better-informed decisions. And having an open resource like TalkFreelance is really just a great way to go about sharing our input and experiences to help people do just that.

Definitely continue, by all means