Discounting your work only hurts yourself

Posted in Tips & Tricks

Have I got a deal for you!!

You are about to hire me to do some work for you.  Furthermore,  because we both know that you are special and different from anyone else I deal with, I’m not going to charge you as much as I charge everybody else.  Yes, you are going to get a discount!  But first, give me a minute to raise my prices, because I certainly can’t afford to make any less money than I am making now.  Okay, that’s done.  Let’s get to work, and here comes your big discount.  Does this sound like the way professionals do business?  Is this how you want someone to treat you?  I doubt it.

There is not, and there should not be, anything called a discount in the investigative field.  Pure and simple.  How can you afford to make less than what you have carefully determined you need to make?  How can you put yourself on sale?

Now, in other parts of the business world, there are such things as “sales.”  They usually occur in the retail industry, and the only real sales that make sense are very selective.  You know, like two days before Christmas, after hundreds of people have bought a particular item at the “regular” price, and the store only has a few left and they want to get rid of them, so they offer a sale.  Or it’s late September, and someplace like Home Depot still has a couple new lawn mowers, or a couple display mowers that zillions of people have pawed all summer, and now they want to clear them out so they have room to set up the giant artificial Christmas trees.  That might count as a real “sale,” and qualify as a real discount.  But when something, anything, is discounted on a regular basis, you know that it is not really a bargain, because the appropriate profit margins have already been worked into the price.

Well, Mr. or Ms. Private Investigator, the same situation applies when you offer someone a discount on your investigative services.  It’s a fallacy.  A myth.  Bigfoot and the Loch Ness Monster. My advice to you is not to give anyone a discount.  Anyone, ever, not even your biggest client.  Follow the leadership of a long-time successful company like McDonald’s:  Do you think people ever walk into a McDonald’s and ask for a discount on a cheeseburger because they are special?  Can you hear the laughter if someone ever tried that?  And you don’t think your company is more efficient and profitable than McDonald’s, do you?

Why not?

Okay, so now that I have made it crystal clear that I am against the concept of a discount, let me explain why.  For one thing, people can see through them, especially when they are contrived.  And if they are not forced or artificial, people usually think they are. But there is a bigger issue, a more serious reason why you should not offer a discount.  By offering some client a discount you are telling him, from the very start, that you are open to negotiation on your pricing, both now and forever.  So, you get a project from a new client and a few months down the line that person says, “Gee, you gave me a discount last time, and things are still real tight for me now, so I’ll hire you again if you can give me the same deal I had last time.”

Should hiring your investigative company be a “deal?”  People deal cards, or they deal in stolen horses.  Your services should not be a “deal.”  Furthermore, what happens when your client refers you to someone else?  If your current and prospective clients have talked, your new client also immediately expects to obtain your services at a discount.  Sure, they may have heard good things about your abilities, but they probably heard even better things about how much you charge.  In fact, your new referred client might even be expecting to get you to lower your prices even more.  (Just shoot me now!  I don’t want to ever deal with that situation!)   As you can see, the issue is not so much that you are giving a discount, but that you have set a policy of how you will do business.  In any business, some things you do, some you don’t, and you have very clearly defined those areas, including the issue of price.

I’ve said this before and it needs to be repeated here: you have to be willing to look your client square in the eye, tell him what your price for your services is, and hope he flinches.  (If your client doesn’t flinch, then you have left money on the table.  If he too readily agrees to pay your price with no hesitation – no flinching – then he was probably willing to pay more.)  Now if your price is fair and fine with you, I’m not suggesting that you gouge your client.  It’s not about charging as much as you possibly can.  It’s about charging a fair price without getting into the mode of immediately offering a discount.

If your client is not willing to pay your fee for services, you have to be willing to turn around and walk out the door.  Your practice of not offering a discount must also be applied down the line, evenly and in all circumstances.  What happens when it is time to raise your rates?  When you do, you need to raise them for everyone, across the board, big client as well as little client.  And if you get a client who calls you up to whine, whine, whine about it, then that’s the kind of client you want to get rid of anyway. Someone may not like your unwillingness to lower your rate, but he will respect you for being firm and honest.  He may not like you, but that’s okay, because you’re not shopping for friends, you’re trying to generate business.


Businessman, Not Hero

One of the major problems I see time and time again among investigators is that they want to be liked, they want to be the good guy (or gal), they want to be the knight in shining armor.  They get into this business for the wrong reason.  Oh, not that there is anything wrong with being a nice person.  I’m not suggesting that you go out and steal candy from children, push old people down a flight of stairs, or throw a dog in front of a moving truck.  (If you want to throw a cat in front of a truck, however, that’s different.)  And you can and should and must be an ethical business person.  But you’ve got to first be a business person, and the purpose of being in business is to make money.  Otherwise it’s just a hobby.   It’s not a hobby when you are billing your time, and billing it accurately and completely.  Not giving a discount also means billing your client for all of your time.  When you are doing anything for that client, keep detailed records of exactly what and how long it took you, and bill him for that time.  New computer case management software enables you to easily create a time management tracking system for your work on any and every case.  Because I can assure you, if you do not capture the time spent on a project when you do it, you will never go back and capture it later.

Now, having advised you against ever giving a discount, I will say that there is one situation in which you could consider offering someone a discount, and that is when you have a cold, calculated reason to do so.  If you give a discount, it needs to be the exception, not the rule.  Generally that means as part of a specific marketing tactic with a particular client, and I need to know up front how long it will be before I get that lost money back in my pocket. Maybe you have not been able to get any more work from a potentially lucrative client for some time, so you send him a one-time, limited time only discount certificate on his next case, but only within the next three weeks.  He already knows you’re good because he has used you before, and you just want a strong message for thrusting yourself back in front of his eyes.  Short-term, definite marketing purpose!  Getting back to the McDonald’s marketing system:  they may choose to offer a discount on a particular food item for a particular period of time, but it is all designed as part of a master plan to get you in the door and to buy something else.  It is not their routine way of doing business, and it should not be yours.

I have gone the discount route in my career in the past, and I can tell you that it doesn’t pay.  So save yourself some time, money, and grief, and learn from my mistake.  No discounts.

1 Comment

  1. Excellent article Roy!

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