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5 Times It’s OK to Sell Cheap: Short-Term Tactics for Long-Term Growth

businessman calculating pricing

For a consulting or services company, competing on price is rarely the best strategy for growth. In my experience, a better approach is to compete on the excellence and the specialization of the services that you provide and the measurable value that you generate for your clients.

Otherwise, you’ll need to constantly take on new clients to make up for the small margins, and you may not be able to provide outstanding service or value to any of them.

And after all, how many clients really want to hire the lowest-cost electrician, HR consultant, or tax specialist? People generally understand that they get what they pay for, and they’re often willing to invest a little more to favor optimal outcomes.

All that said, there may be times when clients would be more inclined to work with you at a rate lower than your target and when this short-term sacrifice could support your longer-term growth. Let’s consider five of these cases:

1. You’re just starting your business

When you’re starting a new consulting or services business, landing your first client can sometimes be a bit of a catch-22. Leads want to see the value that you have already delivered to other clients, but you haven’t necessarily yet had clients to whom you could deliver value.

In this case, you may offer to work with the client at a lower rate or even provide a substantial proof-of-concept for free.

State the quid pro quo tactfully but clearly: if your client is satisfied with the service that you’re providing at a discounted rate, their obligation is to serve as a reference so you can charge your next client your full target rate.

This scenario applies to both B2B and B2C. The remaining four considerations apply to B2B primarily.

2. You want the logo

Visit the website for any consulting and service business, and you’re likely to see a parade of client logos.

For good reason: dropping names of companies that you’ve worked with can help establish you as a trusted authority and close deals.

If you have the opportunity to work with a highly recognized brand, a limited engagement at a lower rate might be worth the social proof that you can plaster onto your marketing materials.

3. Potential for more budget

Let’s say that you provide ecologically friendly landscaping services and you have an opportunity to perform your service on the grounds of a local university. You’d normally charge $15,000 for the level of work that the university needs at this time, but they have only $10,000 in remaining budget for landscaping this year.

Your lead, however, has indicated that before the next fiscal year, which will begin in three months, the university is considering which landscape service to award a full-year $150,000 contract.

Would it be worth it to eat $5,000 on the initial work and still provide great service so you maximize your chances of winning the $150,000 year-long contract? Probably a good bet.

4. Your lead really loves you

When you’re trying to close a deal with an organization, particularly a larger one, there are normally multiple stakeholders and decision makers behind the scenes, and they may not all be equally eager to work with you.

If your main point of contact at the company is championing your services but hasn’t gotten full buy-in, a discounted rate for a limited engagement could be the key to easing some concerns and getting you through the door. Once the full team has been able to observe the value that you provide, additional agreements at your full rate will probably face less resistance.

5. Local work could lead to national opportunities

Let’s say that your company provides accounting services and that you have a chance to work with a local franchisee of a national food franchise. If a discounted rate can help close a deal that allows you to demonstrate exceptional service, the franchisee could potentially introduce you to other franchisees or even to national-level directors. The lower rate could be worth the exposure, especially if you are able to agree upon this exchange as part of the initial deal.

This list is not exhaustive. There may be other cases, such as penetrating (or protecting) a very competitive landscape or breaking into an emerging market, where short-term cuts in your rates could be a good move.

Again, while I would never recommend competing on price as an overall strategy, pricing flexibility in specific scenarios can support growth and profitability.

In all cases, listen carefully, communicate clearly and confidently, and use your judgment.

Feras Alhlou

Feras Alhlou

Feras has founded, grown, and sold businesses in Silicon Valley and abroad, scaling them from zero revenue to 7 and 8 figures. In 2019, he sold e-Nor, a digital marketing consulting company, to dentsu (a top-5 global media company). Feras has served as an advisor to 150+ other new startup businesses, and in his current venture, Start Up With Feras, he's on a mission to help entrepreneurs in the consulting and services space start and grow their businesses smarter and stronger.

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