The Coronavirus pandemic is wreaking a horrific toll on all citizens of the world.
When the final tally is in it is unlikely that anyone will not be impacted in some way or another.
Right now, is a time of great uncertainty on many fronts.
At the same time that we are worried about the health of ourselves and loved ones, there is also a tremendous amount of financial instability.
The economy is on pause in an unprecedented way.
Formerly secure jobs don’t seem so reliable anymore.
Those with the luxury of a full-time job are motivated to put in extra effort to make sure they remain employed.
For full-time consultants or service providers, things can be a bit more tenuous.
During a time like this, anyone whose income (whether personal or company) will go further to retain existing customers and sign new ones.
This is especially applicable to SEO consultants and agencies at a time when marketing budgets are one of the first to be axed.
Economic uncertainty could lend to the temptation for consultants and agencies to slash their prices to close deals, but the question remains.
Is Discounting Ever a Good Idea?
As a digital growth consultant, I am opposed to ever discounting even in a tough economy.
Consulting pricing is based on a calculation of value provided which is contingent on the potential returns to the business but general economic winds are not a factor.
The value of SEO now is the same as it was a month ago.
Therefore, discounting sends a signal that somehow that has changed.
In addition, I believe that now is the best time ever for people to invest in a long-term strategic SEO effort.
With so many marketing channels like paid, display, events and even brand efforts on pause, now is a great time to regroup and build an SEO strategy that might have been deprioritized for a quicker effort in the past.
In fact, the value of SEO consulting is higher than ever before because smart leaders know that now is the time to make investments that will allow them to leapfrog competitors who pause all their efforts during this time.
I didn’t want to just leave this to my opinion alone, so I posed the question to my network to hear their thoughts.
Peep Laja, CEO, CXL, said:
“You might feel an urge to lower your prices. It’s recession after all. However this is short-sighted (obviously depends on your cash reserves).
If you’re not competing on price to begin with, cutting prices is likely to harm your brand and profits for good, even when the downturn ends.
Studies have shown that in many cases, the more people pay, the more value they ascribe to their purchase. Price anchors perceived value. If you discount prices during tough times, customers may begin to question the original value.
Last financial crisis showed that lots of consumers never wanted to go back to paying ‘real’ prices. Instead, create new downmarket offerings. New products/services that cost less, but have no comparison to your existing products. That way you can avoid discounts, but still offer folks the price cuts they might need during tough times.”
Nigel Stevens, CEO, Organic Growth Marketing, gave me a similar perspective for earlier stage companies. He said:
“If you work with early stage companies who haven’t reached product market fit, then your only option may be to cut prices – or be out of work. I focus on companies who are post-product market fit, where the long-term value proposition of the business is unchanged by current events.
If the long-term value is unchanged, why should prices for SEO (making the most of that value prop) change? And if the long-term value proposition is harmed by these events, then SEO isn’t going to save them! Instead of lowering your prices, think about ways to get creative with terms and compensation models.”
Ethan Smith, CEO of Graphite, a boutique growth agency, echoed the idea of value and investing.
“I think it’s always best to price work based on the value created (aka “value-based pricing”). This is especially true for consulting.
For SEO consultants, we should ask whether we are creating more, less, or the same value as before. Given that many companies are shifting their resources away from paid marketing and toward organic growth, SEO is arguably more valuable now than it ever has been.
Furthermore, if anything, the market would suggest an increase in resources for SEO, not a decrease.”
However, I did find one outlier that recommended discounting (with a catch), when I talked with Will Erlandson, VP of Strategy for Adogy, a PR firm that works with small businesses to fortune 100 companies.
Adogy also does value-based consulting – it’s just that their value is one of building relationships first and profits later. He said:
“We approach pricing and discounting as a way of connecting and helping our clients.
We have prided ourselves on lowering prices whenever a client hit a rough patch. This pandemic is no different and we are adjusting our prices as a way of building long term good will with our customers.
This allows them to dedicate more of their budget to their employee and customers which has overall contribution to making the world a better place.”
The theme echoed between all four of these agencies is one of value, and pricing should only be adjusted when the value changes.
What If Things Changed?
To be clear, if the realities of the economy indicate that an agency or consultant’s prices are currently outside the range of what they should be, prices should be adjusted.
The new price should be presented as the current going rate and not as a discount, like for example, a 25% reduction in pricing for a limited time.
This could be perceived as cheapening the value of the offering.
Aside from lowering the value perception, an advertised discount opens up the door to negotiation for further discounts.
It could then put the agency or consultant in a price war with any of their competitors who might offer even lower pricing.
Going down this road could cause significant issues for the sustainability of the agency or consultant’s practice that could take a long time to dissipate.
Discounting as Way to Give Back
One of the silver linings in the current global pandemic is the way people all over the world are coming together to support each other.
Agencies or consultants that want to do their part in giving back to support businesses that have been harmed by COVID-19 might be tempted to discount their services.
This is admirable and should not be avoided by those in a position to do so.
When offering this discount, it is again important to not diminish the value being offered or to open the door to a price war.
One way to avoid this is to include a caveat in a pitch that there are discounts available to those that qualify.
This condition would align the price of services at a standard rate but allow for a reduction in pricing only for those that truly deserve a lower price.
Ideally, this might eliminate clients who are simply looking for the lowest priced offering rather than those looking for the best value.
The criteria for qualification can be set as loose or as tight as necessary, it is just important that there be a threshold that needs to be met.
An obvious advantage to this approach is that when the pandemic ends, there is no need to step back into higher pricing with a staggered approach.
Essentially the pricing itself has never changed, rather there was a specific scenario that might have entitled a set of clients to different pricing that now is now thankfully no longer necessary.
Should you discount SEO services during this pandemic?
It really depends.
But it should always be based on value.
If you have determined that something has changed both up or down in the value calculation, then the pricing should be adjusted.
For those that are looking to offer their services for free or discounted to support those in need, Lily Ray has set up a matchmaking service to connect consultants with businesses.
If you have extra bandwidth this is a great way to give back.
Finally, for businesses that understand that now is the best time ever to invest in digital marketing, this is the time to hire that consultant or agency you have been doing that engagement dance with.
Or even better, go all in and hire a full-time employee.
Michael King, CEO of iPullRank, put together a list of the most comprehensive talent one could ever hope for.
This may be a time of unparalleled uncertainty, but it is also a time where we will likely look back and realize there were extraordinary opportunities to get ahead.