Bartering is bad for everyone and here’s why

Mar 3, 2021Inspiring Stories

bartering is bad for everybody

My dad was a clever businessman.

He taught me that when a contractor quotes a price and the work spec is exactly what you want, then you should never barter or beat them down.

He explained the psychology behind why it’s bad to barter.

Scenario 1

A contractor gives a price for the job and the customer beats them down on price.

The customer feels they’ve ‘won’ and got a good bargain.

But the contractor feels devalued and subsequently de-motivated to do their best work.

That may result in cut corners, they feel disgruntled and there’s a bad energy around the job itself.

The customer gets substandard work and feels let down, and if they confront the contractor (if they can get hold of them) then they don’t have much leverage as the contractor claims “you cut my price, so I had to cut corners to make the price work”.

Both lose.

It’s the same if you’re an employee and your employer announces pay cuts with no change in workload. How happy and motivated do you feel to do your best work?

Scenario 2

If you flip it, the customer accepts the price quoted, the contractor feels good and valued and is motivated to do their best work.

The customer can expect/demand the best work as they haven’t asked for any discount or questioned their price.

If the work is less than perfect the customer has more leverage for either the work to be put right or discount.

Win win for both parties.

Of course it’s different for large companies where they build in wriggle room for price negotiations (for example car sales).

But small businesses and solopreneurs where the service is them, asking them to discount is psychologically insulting and devaluing them.

How to respond if you’re the service provider being bartered down

There has to be a good reason to offer a discount.

Accepting to discount without justification would indicate that your price was over inflated to start with.

If the proposal contains everything they’ve asked for, then a better way is to ask what would they like removed from the proposal.

That’s a nice way to say your price is what it is, yes it can be less, but what you get will also be less.

What about you? Have you ever been asked for a discount?

Image by Mediamodifier from Pixabay