Startup discounts

I have started interviewstreet.com recently (helps in screening programmers). We have got around 10 paying customers who pay between $x-$y a month for the same product , same specifications, etc.

Why I did such bad sales? - early days of startup, maybe I was a little desperate to get a paid customer and hence succumbed to whatever price they quoted. Now, am rigid on putting it up as $z (after reading a couple of books on pricing and analyzing the time it saves) for my product.

People still keep asking for discounts - it's not going to hurt me real bad if I give the discount, but don't want to make it a habit. I stand firm and say NO? Have you guys ever rejected a customer - how & what was the aftermath ?

Discounts are a part of life. What I think you need to figure out is a tiered pricing structure that allows people to try it and then get them to upgrade.

Customers get rejected or deals fall through all the time. The thing to remember is that you need to set certain limits on what you are willing to deal with and then stick by those limits. You really can't please every customer -- you just need enough to stay in business.

The aftermath of customer rejection manifests itself in word of mouth advertising just not happening. The more customers you reject, the less opportunity you have to have those customers recommend your product to someone else. It's a fine line you have to walk and totally up to you on how you want to be perceived.

Someone asking for a discount is a good thing (they either want what you offer, or they can imagine they might). So you have to choose how to field this - to decide what's your policy going to be.

If you've thought hard about the pricing and you feel you're already in the right place, you could still choose to discount - as part of establishing the potential value is real for your customer. 7 day / 14 day / 1 month / 3 month free trials are discounts of exactly that same sort. 100% off for a period of X. Or $Y initial credit is another spin. Or ten free interviews (which I think you're doing now - possibly without thinking of it as a discount). Or you can vary the amount/percentage/duration and think of ways to package this.

Discounting as a way to allow customers to prove the value is totally valid. Of course, it also exposes you to the possibility that people will use your offer to bypass your pay service entirely. The main answer to that is (a) relational and pragmatic - follow up with 100% of your customers, ask for feedback, follow up with the people you're helping to screen and value the learning.

It's also possible that you're in a broad market where people expect there to be stated terms and discounts. So now you have a positioning choice. Is there value in standing out from the crowd with transparent pricing? Or is it better to go with the flow and play that game too - possibly raising your prices so that it all works out even. If you choose transparency, major on that. And if you go with the flow, use the chance to refine what works best in engaging new customers.

So much for discounting.

But what about your proposition? I have to say I'm not totally clear what that is.

So for instance, if you really want to save me time and effort, why does it look (in the Feature Tour) like I have to do so much work just to get started? You seem to be more or less equating general developer hiring and campus hiring - but are they equivalent?

So playing devil's advocate, if I see your site, and I find those ideas attractive, but the offering doesn't deliver, I'm a little alienated from the start. We're opposite sides of the negotiating table, and sure, I'll now look hard at what you are offering, decide if I'm interested, and by default try and beat you down on price. You reminded me of one of my biggest headaches, but you've offered me a pill that only addresses one or two of my symptoms.

And conversely (still playing devil's advocate), if I like your technical offering, but I'm not really interested in that high-falutin' description, my immediate sense is that your solution is bigger than I need. So if I'm not getting full value, I'm being over-charged, right?

So my actual advice to you (you didn't ask for this advice, so you're welcome to ignore it without offence!) is to work on your proposition.

Either

1. If you're happy with the bounds of your technical offering, be more rigorous in limiting your proposition to those bounds. Find great ways (stories, pictures, quotes) to illustrate that. Or...
2. Go and find out more about hirers' problems of (i) time, (ii) effort. How could you build up your proposition - either to include more "out of the box" value, or to add options that allow people to pay more for more value to them.

That's not to suggest you stop selling what you have. Startup life is all about those tensions between developing the future proposition and selling the current one.

Good luck. I like the concept, and I think you have real values to offer. Iterate by sharpening that proposition and you have a great chance moving forward.