Discounts? Just Say No

When Windward first started we discounted a few times to get our first 10 customers. At the start having someone actually using it is more important than the money.

But after that, we considered instituting discounting (and raising our prices to cover it) three times. And each time decided not to. So for 17 years, no discounts.

And it worked better. Much better. Here's why.

First off, it's less discussion and faster. Salespeople don't like to say no and this is a no at the start. But it's a single no, and a single point of discussion. And then done. Whereas negotiating a discount amount is an ongoing never-ending discussion that takes a lot more time. So it's a hard discussion sooner, but it's short and then done.

Well usually done. There are some companies that have teams who's only job is to get additional discounts. And so I had several "lovely" discussions with these bozos. These are people who view every sale as a chance to stick it to their supplier. You have to remind yourself that you're working with the team buying from you and you'll never be interacting with the purchasing people in the future.

What I would repeat to these groups is the following: How can I give you a discount when I did not give a discount to anyone who purchased before you? Sometimes that got through. And sometimes they were a one trick pony that you just had to keep politely replying no to.

What we found is a lot of people just want to know they are getting as good a deal as everyone else. Once they understood no one got a discount, they were fine. We had one that used open records requests to get the price we charged the State of Ohio (that is clever). We walked them through what Ohio bought, and that it was at last year's prices, and they saw no discount. And they were satisfied.

And occasionally we lost a deal on this. Very very rarely. One System Integrator said they view a key part of their value to their customers is the discounts they get them. So they will not buy from a vendor that does not provide them a "special" discount. Another said he wouldn't buy from a company that did not treat him "special." And a third where the discount team was so mad we wouldn't discount, they got the deal killed and forced the project team to use an inferior product that cost more (and that higher cost was after a discount).

There's probably a couple of others. But those are the only ones we're aware of losing due to this policy - 3 deals over 17 years. Compare that to a 10% - 50% discount on 17 years of sales. And some companies are brutal on this where you negotiate the deal, and then when you're about to close, the additional discount team shows up demanding an additional 50% off. And what kind of customers do you lose in this case? You lose the ones that will constantly be looking to pay you as little as possible, often while also demanding that they come first in support.

With that said, we did have discounts. But they were public. We had a discount for ISVs, one for resellers, and we had price breaks based on the total spend. All publicly listed. We also publicly stated that prices go up 5% every April 1. (When COVID hit, we eliminated the price increase that year - to evenly help all our customers. Which included refunding the ones that had pre-paid for the upcoming year's support.)

I have talked to people at a couple of other companies that also don't discount. Without exception they have the same view as me - it's much better. Faster sales cycle and less hurt feelings. Even the salespeople prefer it, once they get used to it. And to me the best part is, all of our customers were treated equally.