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The Real Estate industry is undergoing great changes with our client base shifting from baby boomers to the X,Y,Z generation. Instead of keeping up with changes and improving the delivery of information and service to our new clients some businesses have resorted to the destructive practise of discounting fees.

Here are the SIX main effects resulting from from this destructive practice. 

1) Lack of Confidence

When you’re offering a discount on your product, what is that saying to your prospect? It’s saying that you don’t believe enough in what you’re selling that you think you can sell it for the standard price. You’re showing your cards, and proving that you have a weak hand. As soon as you offer a discount, your prospect immediately loses confidence in you and sees that you don’t stand behind what you’re trying, wholeheartedly, to sell to them. Confidence is a game changer, so when you’ve lost that, you’ve most likely losing the sale.

2) Bad Precedent

When you offer a discount, whether it’s the first engagement or the fifth engagement, there’s no going back. As soon as you lower your price, your customer will expect to see the same thing next time. Or, they’ll hold out until you offer another “special”. And most likely, they won’t purchase without it. And while a discount may seem like that’s your only option, it’s not. You don’t want to set the precedent that every time your customer buys from you, it’s at a discounted price. That’s just bad business.

3) Lower Perceived Value

Most people value something based on it’s price. But as a salesperson it is your job to sell the value of your product or service in other ways. You’re not going to say that your product is the best because it’s the most expensive, right? No (well, I hope not anyway).

You haven’t done your job (effectively at least), if you haven’t demonstrated to your prospect that what you’re selling can truly add value to their life. If you go in with a discount in hand, you’re trashing that value and throwing it out the window. And while they still might buy from you, they’re not going to place as much value on it as they most likely would have before.

4) Untrustworthiness

This point is especially true when you’re in the middle of the sale, and things start to get sticky. You’ve already laid out the proposal, telling your prospect that this is your standard pricing package and the very best that you can do for them. As the conversation continues to spiral downwards, you realize you’re going to lose out on the sale. What do you do? Offer a discount, of course!

While your prospect might be thrilled at the time to get a lower price, in the back of their mind they’re also saying, “Wait, but they already told me this is the very best they could do and now they’re offering me a discount? What else haven’t they been honest about?” You’re stirring up questions that should never be there in the first place. And even if this particular deal goes through, you’ve set the stage for questions and mistrust in future engagements.

5) The "Price" Conversation

The last thing you want in a sales conversation is to have the conversation focused on price. And that’s just what happens when you offer a discount. When the conversation is focused on price, it doesn’t give you room to talk about the other important things, like your prospects’ needs / business challenges and how your company is offering the ideal solution that will make their lives more painless. And in the long run, it’s hard to sell something based on it’s price than on it’s value.

6) The Profit Cuts

It’s hard to run a successful business. And with the ever-increasing competition, it’s even more important that you hold onto as much profit as you can. As a business, if you discount by 50%, what does that do to your sales? It means that in order to hit your same revenue goal, you’re going to have to sell twice as much. Do you have the time or the manpower to do that?

The same is true for an individual salesperson. When you’re offering your prospect a discount, you're going to have to sell a whole lot more in order to meet your monthly quotas. While this might not necessarily affect your current sale, think about what it means for your workload, which in turns affects your ability to sell effectively. You're going to be stressed, rushed, and very driven to just move onto the next sale because you’re always playing catch up.

Prospects can feel (and I can assure you) that it scares them away. If you're not spending the proper amount of time with each of your prospects, then you're going to have a much harder time closing that sale - making you even more stressed and rushed. It's the never-ending cycle, that all leads back to that very first discount.

 

How will you choose your agent?

 

By the size of the discount or the service and skill set they offer?

 

Which will ensure you the highest sale price, the amount of knowledge and skill or the size of the discount?