Discount
A reduction from the standard price, given to win or keep a client. Easy to offer, but it comes straight out of margin and can anchor expectations low.
For example, an agency knocks 15% off a $20,000 project to close it. That $3,000 comes entirely out of profit - and the client may expect the same rate next time, making the discount more expensive than it first looks.
Why it matters to agencies: discounts feel like a small concession but they cut straight into margin and reset the client's sense of what your work costs. Trading a discount for something in return - a longer term, a deposit, a referral - protects both price integrity and profit.
- Giving a discount for nothing in return.
- Discounting to win a poor-fit client you will regret taking on.
- Letting one discount anchor the client's expectations of your price forever.
What is a discount in agency pricing?
A reduction from the standard price, given to win or keep a client. Easy to offer, but it comes straight out of margin and can anchor expectations low.
Why are discounts risky for agencies?
They come entirely out of margin and can anchor the client's expectations low, making future work harder to price at full value.
How should you handle a request for a discount?
Trade it for something - a longer commitment, a deposit, a referral or a case study - rather than giving it away for nothing.
How does discounting affect realization rate?
It lowers it - discounted hours are worked but not fully billed, so heavy discounting drags realization and profit down.