When Clients Push for Discounts: Conflict Skills and Solutions

In this episode, Simon Goode explores a real-life case study of a client requesting a discount for mediation services, analyzing the situation using conflict resolution frameworks. He breaks down the negotiation through the five types of conflict—value, data, interest, structure, and relationship—and discusses strategies like collaboration, compromise, and assertiveness. Simon Goode emphasizes the importance of considering one's alternatives (BATNA) and maintaining clear boundaries when responding to discount requests.

TIMESTAMPS:
00:00 Discussing pricing and client negotiations

04:19 Managing client misunderstandings

09:56 Discussing an interest conflict

13:33 Improving client communication strategies

15:21 External factors affecting responses

19:45 Negotiating client compromises

21:10 Conflict resolution strategies

25:26 Discussing negotiation strategies

Transcript

SPEAKER_00 0:00

Well, hello and welcome back to the Conflict Skills Podcast. I'm your host, professional mediator, Simon Good. I set up this podcast to provide free resources and tools for dealing with conflict. So if that sounds like the kind of thing that's useful to you, please consider pressing subscribe. Well, in the episode today, I'm going to be going through a conflict resolution case study. I've got my iPad out that I'm going to use as a little bit of a virtual whiteboard. And I'm talking about the topic of a client who requests discounts. I know that that the old saying of, can you sharpen your pencil a little bit, like when we send out a quote and the client comes back and says, can you lower it? Sometimes, in my experience, that's this is because they're a community service organization and not for profit or something. And they're sort of saying, Can't you help us out here? We do very good work. Other times it might be that a competitor's come in cheaper than you, and so they're wanting you to match somebody else's price. It might be that their estimation, their budget, is out of alignment with what the costs would be, so that they can't actually approve the amount that you're wanting to charge them. Or it might be something else that's going on behind the scenes entirely, and we don't really know. For me, a large quote that I might send out is like $50,000 or $60,000 or something like that. It might be a large government department that wants many staff trained in conflict resolution or something similar. And at times I do send them a quote and they come back asking, can you sharpen your pencil a little bit? This one that I'm dealing with today, though, it's not a $60,000 quote. It's a $1,500 quote. And I thought that this could be a helpful thing just to explore how do I approach these kind of issues myself in my own business? And what could you do in your context to also hold the line and make sure that you're getting paid as much as possible for the work that you're doing? It's one of the very common mistakes in my experience that new mediators make is that they don't charge enough money. Okay, so I'll explain a little bit about the situation and then we can talk through some options after that. So for this particular service, it's the beginning of a mediation. I usually go and meet the two parties that are involved. For this particular client, I decided that I wanted to charge them $1,450. So I've written that down. And that's if I'm able to see both people on the same date. I'll come into the office, meet one of them for an hour or something roughly like that, maybe a half hour gap in the middle, and then I'd meet with the other person. Typically, when I'm doing a workplace mediation, I would then meet with the HR manager or the operations manager or the business owner or whoever's the relevant kind of senior person, get their input and talk to them broadly speaking about any themes that I've noticed. And then together we plan what would be helpful for the actual mediation session. So this is the very beginning. It's a brand new client. I told them if you want me to come and meet just the two parties, not do the HR manager kind of thing, then I would charge 1,450. The organizing manager then came back to me and said, Oh, we've misread it. We've misread your website or we've misread an email that you've sent, or I'm not exactly sure what they think that they'd misread. They thought that they could still have the two people, but instead of it just being one date, it would be two days, which would mean that I have to go meet one of them, come back home, go on a different day, meet the other one, come back home. So obviously for me, this is an inconvenience that I don't particularly want to do. So I normally say something like, Look, if you do want me to do that, this is what the additional cost would be. So I wrote in this particular instance it would be an additional $4,000 plus GST. Sorry, $400 plus GST. So if I can come on the same date, it's $1,450. If you want me to come back on two different days, the cost would then effectively be $1,850. So they came back and said, that's too much. We've misread your website. Could you do the two separate dates for that original cost? And the language that they used is, will you honour the original pricing? Now I have to say, for me, I don't like it when people imply that I've done something unethical when I haven't. And so initially I wanted to say, you're wrong about that. I've never had any other client misread it in the same way that you are. Almost like, what are you trying to pull? Why are you putting painting me as the person that's caused the problem here? But all of that defensiveness and resistance that comes up is probably not going to be very helpful to pursue, is it? So for me, I find it a good idea just to pause and reflect, consider all of those initial urges and what we would like to say or what we would like to write back to the person, and then just sort of analyze all of these factors that are contributing in relation to the goals of what I'm dealing with at the moment. I guess the first thing that jumps out at me is it's only $400. So I don't want to lose sleep over this kind of an issue. But I know that because of the way that I've dealt with conflict in the past, sometimes these very small little bugbears often consume us and they take a lot of our time and energy. So whatever I decide to do with this particular client, for me, one of my goals is that I don't want it to cause undue stress. So a short and sweet kind of response, there's not enough at stake where I want to spend a lot of time writing an email or talking with the person on the phone or something similar. I don't particularly like talking to them on the phone. So I thought about that option. Should I call them and explain, oh, I'm sorry, you must have misread it? Or I could call them and say, no, I'm not going to give you the discount that I'm asking you for or something similar. In this case, I think I'll probably just return email because I don't know them. I don't have any existing relationship. To be frank, I've got other clients that are contacting me as well as the at the moment. So I don't really have much to lose if they decide to go somewhere else. In negotiation, this is a concept called BATNA, B-A-T-N-A. This stands for the best alternative to a negotiated agreement. In other words, if this person doesn't decide to hire me to do the mediation, where would that leave them? That's their Batna. That's their best alternative to negotiating with me. And where would that leave me? What's my Batna? What's my best alternative to negotiating with them? I'm busy at the moment, so for me, my best alternative is that I've got six other inquiries that have come through in a similar kind of time frame. So I don't really mind. So for me, my best alternative is actually very, very good at the moment. This can be quite a helpful topic to consider when it comes to negotiation, though, because at times there's things that you can do to improve your Batner, improve your plan B, write to some previous clients and ask if any of them are interested in a workshop or something similar at the moment. And that would mean then that I can be much more assertive with this person that I'm negotiating with. So we can do things to improve our Batner, to improve our plan B. And we can also use this as a way to estimate how much power or leverage does the other party have in this conflict. For them, I know that there's not a whole lot of other workplace mediators in my area. I live in a regional kind of area. And I know that these amounts of money that I'm talking about are not outside the realms of what's considered normal. In fact, when I'm doing mediations in the Gold Coast or Brisbane or even Sydney, I often charge more than double that, to be frank. So I know that for them, they're probably not going to be able to find the similarly experienced mediator as me for a similar amount of money. I think that's also part of the reason why I felt so insulted when they first came back and said it's too much. Can you wanna your original price? Because in my mind, I'm thinking I've already given you a discount. Like, what's your problem here? So what I'm beginning to talk about there is what I would call value conflict. I've talked about the five types of conflict in episodes previously. We've got value. What do I think should happen? What do I think is fair enough? Maybe from their perspective, they think that because the information wasn't communicated clearly, that therefore I am liable to pick up on any misunderstanding that comes up as a result. Whereas from my perspective, I think, who do you think you are? You know, I'm the person that's providing the service. I'm going to set the price. You have the option to hire me or not, but what right do you have to come back to me and tell me that I'm too expensive or imply that it's my fault that the text was wrong on the website or something similar? So that element of value conflict is obviously there in this conflict that I'm dealing with at the moment. So I could choose to deal with it in that value lane. I could say it seems like this is your perspective, this is what you think is reasonable on my end, this is how I'm thinking about the situation, this is how I see things, etc. I'm not sure though. I don't think often we're able to change the other person's values. I mean, they've come to this perspective through all of the different experiences that they've had throughout their whole life until this point. Often it's more about noting the difference, validating both perspectives, and then talking about how we can deal with this moving forward. Very clear expectations are often an incredibly helpful starting point when we're trying to rebuild trust or get our values a little bit more in alignment. But we've also got the other four types of conflict that we could consider as well. So we've got value, that's the first type. In addition to that, we've probably got elements of data conflict that are going on here. They've misread the information on the website. That's obviously an example of data conflict. So I could go back and say, no, it is clear on the website. This is what it means, this is what the actual phrasing is. I'm not sure if maybe you're looking at an old version or something similar, or maybe you've come across a different piece of content that we've published. But from my perspective, the information is clear. That would be a way of dealing with the data, correcting the other person, filling them in on information that they might not know. The third type of conflict that we've got is interest conflict. And obviously, this one is present in this dispute that I'm dealing with as well. They want to save money. And I want to make sure that I'm not going to their office two separate days, doing all of the travel, blocking out two separate mornings in my diary for a relatively small amount of money. But what else do they want? And what else do I want? I might be prepared to give them a lower price. If we could do the meetings online instead of in person, obviously then there's no travel that I would need to do. I might be prepared to give them a discount if we can push it back a month. I don't have as much stuff booked in when we're thinking about September at the moment. So if they'd be willing to book some dates, then sure, that might work for me. So that's what I want. I could just negotiate about these different factors. Sure, I would be happy to lower the price in some situations. This is what this looks like. I think about this often as what's called transparent negotiation. When they say, Can you sharpen your pencil? I might say something like, Look, there are some situations where I can lower the price. I usually say, Would you like me to walk you through what those look like? Yes, okay. So if we could do it online, I can give you a discount. There's no travel to factor in. Obviously, that's not as disruptive for my diary management as well. I might say things like, if there's other mediation processes at the moment, or maybe you're in need of some staff training, obviously, if we bundle a few of these different things together, I can lower the price pretty significantly overall. If you don't need me to do the mediation myself, I've got a number of subcontractors that I could offer. They are often charged at a lower rate, but on at the same time, they've got a lower level of experience. So I suppose there's a bit of a trade-off there, but that's another option. If you'd be willing to pay everything up front, whatever the things are that I want. So I kind of put my cards on the table. This is what I want. I don't want to travel. I want you to pay the full invoice up front instead of the three milestones or something similar. I'd prefer to push it back until September. I would like a cheaper member of my team to do the work than me doing it myself. And then I'm giving them this sense of autonomy. We've provided certainty and clarity. That's the part about the data. And now the interest negotiation is about what's in it for you and what's in it for me. I find this approach to be particularly helpful when I've got a quote back from someone and I'm saying to them, can you lower the price? I find that people don't usually like to give a discount when the shoe is on the other foot, of course. Like me, I don't want to give a discount right now for my own time and my own service that I provide. But they might be willing to include more for that same original price. I often find that has a lot more benefit to explore. If I pay you that additional amount that you're talking about there, could you do these other things that are helpful for me as well? It's sort of seeing the negotiation instead of a fixed pie zero sum game. It's more like expanding the factors that we're considering. That's what I would think of as collaboration rather than just compromise. So we've got value conflict, data conflict, and interest conflict. The other two factors that could be playing a part here are structure and relationship. I might actually put relationship down the bottom because it probably underpins a lot of the other four factors that I've noted there as well. So structure. I could instead of letting clients email me to book, I could set up a simple booking form on the website. I could improve my terms and conditions. I could circle in one of their senior managers. If this is a relatively junior person that's just trying to get a win or something, maybe there's other options that I've got in terms of including other people. I could not respond to them as quickly as they might want me to. I could give them more information about my background and the difference between me and the other options that they've got for local mediators. Like all of these are things that I could consider in terms of the changing of structure. And then I could also think about do we make a phone call, do we email back and forth, how much information is best to include, all of those different elements as well. Should the email back from us come from me personally? Should it come from my company overall? These are all likely to elicit a different response from the other party depending on how we decide to approach it. So value, clarifying both perspectives, validating, talking about next steps and very firm expectations, clarifying the data, going through any sources of misunderstanding, anything else that might be sitting there in terms of you looking at the same situation from different perspectives. We could talk about the interest, what's in it for you versus what's in it for us. We could just leave the whole data thing aside and say, okay, fair enough. Look, the website probably wasn't much wasn't clear. If you can do this for me, this is what I can do for you. Like we're purely negotiating at that interest layer there. And then we could change the structure. Or we could think about the reciprocal patterns that are going on in terms of the relationship. I mentioned that I felt quite annoyed when I got that email from the person asking for a discount originally. And that's not just because of what they did. If we think about me sitting here on my laptop, I've got all of these other things that are influencing me from the outside world, my family, my health, my habits, the other things that are on my plate at the moment, the different challenges that I'm going through at work. All of those change my capacity to respond rather than reacting, for example. And so that influences the way that I treat them, the way that I communicate with them. And they've also got a whole bunch of other external factors going on in their outside life. All of that has nothing to do with me, but that influences the response that I get. For example, they might be really hounded by their boss at the moment to save money in the HR budget or something similar. And so I'm not aware of that, but they're not necessarily asking for a discount because they want to. They might have been told to do this by somebody else, a previous organization that they might have worked in, for example, might have expected that stuff push back before just agreeing to pay invoices or that kind of thing. So I don't know all of those external elements that are going on for them. They don't know all of the external elements that's going on for me, of course. And then we've got this constant back and forth, the way that they hold their face, their posture, the pause they take before they speak, facial expressions, the actual words that they say. And I then decode all of that information and I make sense of it. This is what they're saying, this is what they mean, this is their intention, and then I respond. And depending on how I've perceived this, of course, that would very much change the feelings that I'm experiencing as well as the thoughts and the story that I'm telling myself as well. So, what should I do with this particular client? They want the discount for 1,450. I would prefer them to pay 1,850. So I could talk about value. I could say to them, look, I understand where you're coming from. I imagine it's probably a particularly challenging time at the moment in terms of budgets, given the increased cost of materials or the increased cost of travel or something else. Like I can certainly understand your perspective. At this stage, there's no discount that I can offer. The challenge for us is that we've also got a number of different inquiries that are coming through at the moment. And so we've really having trouble at the moment even finding available dates. So it's not really the time of year where I can be flexible. Apologies for that. So I'm kind of saying you're not wrong by asking for a discount, but I'm looking at different factors. I've got different sets of priorities, different things that are of focus to me. We could clarify the facts. Like I could say to her, Oh, excuse me, that's not what the website says. It is very clear. I don't think in this situation that's probably going to get me very far. So I might leave that one for now. Um, for me, I chose to just communicate it really based on the interest. What's in it for them, what's in it for me. And I know that my Batna is pretty good. My best alternative to a negotiated agreement is pretty good. So to be frank, I'm quite prepared to be very firm. If they want me to reduce the price, then I want to make sure that there's something else that I get in return that's valuable for me in a similar kind of way. So when we decide to just deal with the interest, what's in it for them versus what's in it for us, there's five different ways that we could go about this. The first option that we've got is we could just avoid the conflict altogether. Like I could just not respond to the lady. Probably a week or two later, she would then follow up and saying what's going on, I haven't heard back to you from you. And I could say, Oh, I'm so sorry, I've been flat out at the moment, we're just under the pump. No, I'm sorry, that discount's probably not going to be possible. So at the moment, I could just avoid it, whether I decide to say no or say yes down the track. I suppose that depends on what else is going on. The other option that I've got that would potentially keep them happy is accommodating. I could just say yes, no worries, I'll send through the invoice by this morning or something similar, right? So we've got avoiding or accommodating. This is where we basically just agree to what the other person's proposing. Each of these different five conflict modes tend to have different positives and negatives. Accommodating, obviously, that's good because the relationship is positive. The clients really like you when you give them stuff for free. At the same time, there's often a cost that's paid when we take that accommodating kind of approach, a lower amount of revenue in that month, for example. The middle option that we've got is compromise. Split the difference. I could say to this person, uh, look, I can't reduce it to that amount that you're asking, but what about we meet in the middle? Instead of an extra $400, what about an extra $200? How does that sit with you? That compromise can be actually quite a good option in some situations. Beg your pardon, I didn't realize that the whiteboard wasn't showing for that few minutes there. Um, compromise can work, especially when there's not much at stake and you've got a lot of time pressure that you're dealing with, then maybe just splitting the difference makes sense. But we've got two more assertive options that we could consider as well. One is competing, or sometimes that's called directing. This is where we take a very firm approach. In this situation, we would basically just say no. Um, I think that is probably the way that I'll respond when I write back to this person. I'm just gonna say, look, apologies for any confusion, but there is probably nothing that we can do in terms of doing it on two separate days for that original price that I've quoted you there. Um, for me, what I'm needing to prepare when I take that competing kind of approach is the stress that's involved. They might respond very angrily. Of course, it's sitting there in the back of your mind until you get a response from them. So it sounds very good being firm and holding on to your boundaries, but I might need to really be careful to exercise and manage self-care or those kind of things if I do choose to go down that path. And then the final option that we've got is what's called collaborating. We could say to them, look, is there an option to change the timing? Is there an option to pay the full invoice up front? Is there an option to do it online instead of in person? So whereas compromise would say, look, if you can't do 400, what about 200? The collaborating approach is saying, look, maybe if we're willing to pay the 400, there's something else that I can give you that's useful for you, or if I do give you a discount. Maybe there's something else that could be different that's useful for me. So within each of those five conflict modes, we could compete, we could collaborate, we could compromise, we could accommodate, just say yes, or we could avoid. Each of them have different positive and negative aspects. Collaborating is sometimes written as win-win, and it does sound ideal. Let's see if we can come up with a win-win here. The challenge is that not every conflict situation has a win-win that's possible. It might be that you've really got that collaborative mindset, but it's not actually going to work because of the issue that you're dealing with. Like the staff work on different days. So regardless of how collaborative I decide to be, I'm probably going to need to go in there and meet them on separate days. It's just the way that it is. The other risk of that collaborating is that someone might take advantage of us if we're flexible, we compromise, we give them the benefit of the doubt or whatever. Some people, especially if their natural mode is that very competing, assertive kind of approach, that might be a situation where it becomes an unrealistic precedent and then they have the expectation that they can almost walk all over the top of you. I don't know if that's something that anyone listening has experienced for me. I've dealt with that a number of times. And I usually find it more helpful to be firm and assertive early on and then be flexible, then compromise down the track. I think if we're too flexible, like with this particular client, if I said, fine, 1,400, let's just go with that, that's that's fine. Obviously, the next mediation that they call me for, they're going to be wanting a similar kind of deal. Whereas I don't want to set that up as a precedent. In fact, when I write to her and say no, I might actually say that you do have these other options that are cheaper, but there are these big downsides as well. They're on set dates or something like that, or it's an online AI kind of option for resolving conflict or whatever else it might be. I'm kind of outlining their Batna, outlining their best alternative to negotiating with me. What would you do? Would you split the difference and say, well, if you can't pay 400, what about 200? I think a lot of people listening might take the accommodating approach of whatever, that's fine, just say yes, and then we can get on with it. Like it's not a huge amount of money, and there's a lot of other opportunity cost if we decide to stress ourselves out and get overwhelmed, get ourselves all wound up or worked up. So maybe the $400 is something that's just worth paying. Maybe there are these options for collaborating. Is that something that strikes you as an approach that could work? Or I wonder if anyone listening does just take that avoiding approach. It's something that I've been experimenting with a little bit more myself is delaying responses. Even when I might write an email, I often set the setting so that it sends later in the day because I don't want the energy to be winding up the back and forth of those quick replies, especially when there's conflict and tension that's going on. So slowing things down, just not responding until the next day or something similar. You know, obviously it's not going to resolve the conflict in the short term, but in a lot of situations, there might be some benefit to considering that fifth option as well, isn't there? So competing, collaborating, compromise, avoid, and accommodating. I'm thinking about those, particularly in the context of the interest, the money. That's really the only thing that matters to me in this particular situation. But I've talked about a number of other options that I could consider. And I've explained how this is all connected ultimately to this concept of BATNA, the best alternative if they don't hire me. That's perfectly fine with me. So that's probably influencing the approach that I take more than almost all of the other factors that are relevant here, to be honest. But what do you reckon? Has this been helpful hearing me pull apart this particular negotiation in this kind of way? Has there been something that I've shared that resonated with you? Maybe there's something that's reinforced, an approach that you already take, and hopefully some new options to add to the toolkit that could potentially be useful in the future as well. I'd love to hear from you. If you have found it useful, please consider hitting like, pressing subscribe if you'd like more resources for dealing with conflict. But otherwise, thank you very much for listening or watching, and I'll hopefully see you again on this channel or a future episode of the Conflict Skills Podcast. Bye for now.