Is it wise for freelancers to offer discounts to prospects and clients?
Discounts are a common occurrence in the retail world and they can be great incentives for more sales. For freelancers, offering a discount to clients can come with an array of benefits as well but also some notable drawbacks.
Freelancing by its very nature is a relationship business. You work one-to-one with clients on a project, injecting your unique knowledge, expertise, and personality into the work. Whether you’re a designer, a writer, a consultant, or any other type of freelance specialist, you are one person with a set number of billable hours each day.
In this sense, you are not a commodity. A product can be temporarily discounted or sold in bulk for a reduced price, without any ill effect but for a freelancer, doing so can be damaging to your bottom line. It’s therefore vital to ensure any discounts you do offer provide benefits that outweigh the monetary hit.
Common reasons why clients ask for discounts
All freelancers, at one time or another, are asked for discounts by new clients.
Usually the requests come from clients with small budgets who desperately need your services but cannot afford your rates. They might suggest you will gain exposure by writing for a reduced price. Or they promise more fully paid work in the near future, if you discount a bit now.
Some might even claim you are more expensive than other freelancers, in an attempt to bring down your quoted price.
Requests for discounts ultimately come down to the client failing to understand your worth as a freelance professional. We’ll touch on this a little later but first, what are some benefits of proactively offering discounts to prospects and clients?
Benefits of offering discounts
Discounts can be particularly helpful when looking to grow your fledgling freelancing business or to expand. For example, they can help you:
Attract clients quickly – Discounts attract price-conscious clients. If you can undercut your competitors with attractive discounts, you’re more likely to win work faster. This is beneficial if you’re a new freelancer just starting your career and you need quick money and a confidence boost. It’s a short-term tactic.
Build a portfolio – Attractive discounts can persuade price-conscious prospects to take a chance on you even if you have nothing in your portfolio. Offering sizeable discounts for a short while will help you build a portfolio from scratch and gain a series of testimonials.
Gain experience in a new niche – If you’ve been a generalist freelancer for a while and you’re looking to specialize, then offering discounts can be a great way to get your foot in the door in a new niche. This applies whether that niche is industry-focused or based around a new primary service you want to offer.
Drawbacks of offering discounts
With the benefits also come the drawbacks. Offering discounts can:
Devalue your skills – People expect high quality products and services to cost more. When you discount on a regular basis you suggest to clients that your freelancing services are not of the highest quality. Plus, you might also portray a lack of confidence.
Suggest everything is negotiable – Discounting automatically signals your service prices are negotiable. This can lead to prospects and existing clients constantly asking for downward adjustments to the price of new projects.
Attract the wrong type of clients – Price-conscious clients tend to be the hardest clients to work with. They see you as being a cheap commodity rather than an important investment. Your work is therefore seen primarily through the lens of price rather than skill, experience, and human connection.
Push you to work harder for less pay – Discounting your work, especially retainer work, can leave you working longer hours for less pay. The benefit of onboarding a new long-term client can soon become claustrophobic as you’re stuck working harder but with a reduced overall cash flow.
A great alternative to discounting
If you’re a kindhearted freelancer, it’s tempting to give discounts to your favorite clients. When you really love working with a long-term client, a few discounts can nurture the relationship. And when the work gets easier due to repetition and familiarity, you work faster anyway.
Yet something to consider is that in the world of employment, a long-term employee usually gets a pay-rise. They don’t get paid less for working more effectively.
As an alternative to discounts, you might consider various pricing strategies which add greater perceived value to your service offerings. You can do this by including a free item (such as a downloadable guide or template) or extra benefit (3-month email support) with the service.
Consider what your target audience really need and see if you can sweeten the service offering rather than discounting the price.
Avoid discounts with better branding and marketing
Another great way to completely avoid discounts altogether is to create a personal brand that attracts the right clients. The best clients are those who value your expertise, experience, skills, personality, and the results you can achieve.
Part of good branding involves how you portray your business to the outside world. It includes: good quality brand and website design; strong copywriting; focused marketing strategies; intelligent sales tactics; investment in the right software and tools (incl. invoices); and also your self-confidence when interacting with prospects.
As a freelancer, you’re in control of who you attract.
Should freelancers offer discounts?
Many freelancers offer discounts, especially when it comes to packaged services and retainer agreements. As we have shown, there are both benefits and drawbacks to discounting your fees.
The choice you make largely depends on where you are at in your freelancing career, your services, your existing clientele, as well as the type of client you’d prefer to work with in the future.
There are no hard and fast rules.
But there are options – including time-sensitive discounts and not offering discounts at all.