The other day, we were pitching for new business within an existing client. Not surprisingly, the client’s finance team (or procurement) took a machete to our pricing, asking us to reduce the proposal quote by as much as 30%. Their reason: our cost of sales was zero, and repeat business required a discount. I was hesitant to give away the discount because the project wasn’t any less complex. We walked out of the office, promising to respond in a day.

While my team was eager to pursue the project at all costs, my sales lead was silent. If we took out her commission, our cost of delivery, and the support we would have had to extend post the project launch, the math did not work out well. She then came with a brilliant plan. In the scope of the project was included a 30-day warranty. She extended it to a full 90 days, and also added a round of revisions at half our normal billing price. Her logic: If we discount our price, the client will feel obliged to keep his requirements to a tight plan–but he was still thinking through the concepts. Why not allow him the freedom to change requirements mid-way, but we charge changes at half the price?

Our client finance team came around to the proposal.

If you are fighting on price, it is a race to the bottom that no one wins. If your sales team is pitching your services on a “priced-to-sell” model, good luck with adding to your top line.

If you have examples of how you priced your services creatively, please feel welcome to share your thoughts here.

Best
Karthik