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Why Offering a Discount Isn’t a Good Thing

Revenue & Finances

Joshua Davidson wrote this article

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I’m about to say something that might be pretty unpopular: it’s not a good thing if you’re able to offer your client’s a discount on your services.

Let me backup for a second.

At Chop Dawg, we believe in offering fair pricing with complete transparency, and we follow this methodology to the letter with our flat-rate pricing model when it comes to the development of digital products.

But I can’t tell you how many times we’re in talks with a potential client for a pretty amazing project, have developed a scope of work, and when it comes time to talk raw numbers, the interest slips.

Believe me, undertaking the creation of an app or other digital product is a huge team endeavor, and the amount of resources it requires could bring even the bravest to their knees.

Or when we’re deep in the trenches of an ongoing project, and suddenly, the project scope changes. It’s no problem of course, but with a flat-rate pricing model, anything unaccounted for within the initial project scope must be billed extra. It’s simply the reality.

Finding the right price

This is something most businesses struggle with.

How to price your product in such a way that is fair, but not so low as to seemingly tarnish your product or services own intrinsic value. You also have to make sure you stay competitive with market pricing.

All while staying true to your company’s needs and value.

It’s about finding a balance; a sentiment that can pretty much be applied to any business scenario, of course.

In particular, it comes down to figuring out your company’s own value vs. cost ratio. If you’re providing greater value, thereby increasing the input of your company’s own resources into any given project, your product or services could and should cost more than your competitor’s.

Your pricing model should strike a delicate balance between competitive and fair for your client’s, while still ensuring the overall health and financial growth of your company.

Why Offering a Discount Isn’t a Good Thing

There is one exception to this rule at Chop Dawg, and that’s when we bill as a one-time payment.

In the development world and within our flat-rate pricing model, this allows us to set more resources behind the project at hand in a short burst, reducing costs across the board by expediting progress.

But if you’re able to discount your product or services further than this, to me, it implies they are marked up in the first place. And as a consumer, you should definitely bear this in mind.

Think about it this way: Chop Dawg has been around for 10 years.

While things started off in my childhood bedroom building websites for small businesses, we are now a full-scale technical partner and agency building web and mobile apps,
and developing blockchain and VR technologies.

Our pricing model did not come about by accident. It is the result of years of toiling, care and consideration, and at times, trial and error.

When we first pivoted from websites into apps, we undershot the overall cost estimate so considerably it was laughable. After months of work with an ever-changing project scope, the app was launched to success, but not without ending up in the red for Chop Dawg.

That experience taught us a lot, such as how important it is to have a set scope of work before development begins. Without a predetermined scope of work, development is like trying to hit a moving target.

Our process today accounts for all of this and more, and it’s how we’ve been able to develop the fair and transparent flat-rate pricing model we adhere to.

It’s also why adding to the scope of work for any given project will add to the project’s cost at any technical agency with a flat-rate pricing model like ours. Laid out this way, it seems simple, but the reality of it doesn’t always play out so straightforward.

The Best Way to Price Your Product or Service

At the end of the day, there will always be someone out there who thinks your product or services are too expensive.

And there will always be someone looking for a discount.

But if you’ve put in the necessary effort and experimentation needed to prove your pricing model, both to yourself and in your industry, then you can afford to be steadfast in it.

At Chop Dawg, we’ve done our homework and understand the intricacies of the development and design of digital products, including mobile and web apps, augmented reality and blockchain technologies. Our process and operations allows us to offer the highest possible quality, attention to detail, and teamwork, and our pricing model makes it all possible.

Remember, you are the expert when it comes to your company and its inner workings, and if you lead with integrity and place your client’s well-being first, it shouldn’t be necessary to undercut your company by offering a discount.

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