Do I need to discount a project I screwed up?

No matter how good you are, sometimes you are going to screw up. So when you drop the ball and screw up a project, do you need to give a discount? Well, it depends.

For my company Nimdzi Insights, I regularly have consulting calls with clients who need help. Today, somebody scheduled some time on my calendar with an interesting problem, so I want to talk about it a bit. 

It all started with a disaster project that just had a million things go wrong. If you have never been part of a cursed project like this, then count your blessings. If you have been, then you know that even the best of us has the project from hell every once in a while where everything that can go wrong does go wrong. 

The client sent the wrong files, which were then processed and delivered. But since they were the wrong files, now they needed the correct ones to be processed in only two days… Needless to say, this was really rushed and mistakes were made. Now the client is demanding a 50% discount on the invoice for that project, so my client was asking my advice on what to do. 

The question: How should we respond to the 50% discount that the client is demanding? 

As usual, the devil is in the details, so we need to do some discovery. Remember that good consultants ask lots of questions. Never jump right in to start fixing a problem! So after doing some basic discovery with my client, we uncovered some useful information: 

So let’s clarify a few things here

• Firstly, the project request or (my client’s client) did make a mistake. They sent the wrong files, which they acknowledge, but claim that the vendor should have caught that mistake. 
• According to the client, this mistake from the client really should have been caught by the vendor. The vendor (my client( agrees that this is a mistake they should have caught. 
• There were two vendors working on this project, and it is not clear if the quality issues were present in files from both vendors because the client has not provided specific feedback on what is bad. 
• This is a regular client, though not a large or strategic client. This project in question is a small project between 1-2,000 USD, meaning the discount they are asking for would be ~$800.
• My client has already paid his vendors who worked on this project, so there is no option of discounting the project costs. Even if this were an option, my client agrees that this would not be an ethical business practice. 
• The client project manager is a new project manager and not the typical project manager that we work with. 
• Lastly, the client has asked for a 50% discount on the invoice for the project, citing these quality concerns. The client has not provided any specific feedback or examples of any mistakes.

So let’s go back to our original question. How should we respond to the client’s demand for a 50% discount on this project? Let’s start by looking at the two extremes of what we could do. 

The first extreme is to give the client what they want without any arguing. On the other extreme we can play hardball, even threatening the client with legal action if needed. Neither of these extremes seems particularly attractive though, so the ideal path is probably somewhere in the middle. But let’s look at some general principles 

Don’t give anything away for free. 

It would be a mistake to just give up and give the client what they want immediately. Even if it is the right thing to do. Always ask for something in return. So even the client deserves the 50% discount and you have the means to grant it to them, it would still be a mistake just to give it away without getting something in return. 

The natural choice here is to ask for something monetary. Indeed, this is how most negotiations take place. The ask for 50%, you as for 30% and you agree to 40%. However, there are plenty of other bargaining chips you can use besides simply money. 

For example, one thing the client needs to ask for and receive before agreeing to any discount is the quality feedback. Remember that the client has not even provided any specific examples of why the quality is so low, so it is perfectly reasonable to push back on providing a discount until the client provides this. 

Use a bad cop CFO

It can be challenging push back on a client in a way that doesn’t make you seem rigid and inflexible. However…. sometimes you have to be rigid and inflexible. In these situations, it can be easiest simply to blame your inflexibility on an external source. 

The easiest way to do this of course is to blame the situation on somebody else. Note we are not blaming the original mistake on somebody else, but rather the fact that we can’t be more flexible. 

For example, rather than just saying no to the requested discount, you can say that it wasn’t approved by your boss, or your CFO. The only caveat here is that you need to make sure that those people are aware of the situation so that there are nasty surprises. Most bosses are happy to play “bad cop” when needed. 

Even better, though, is to blame a situation on a certain rule or policy. This avoids having to blame any other person at all! So rather than saying “The CFO did not approve the change to the invoice,” you can say “Company policy is to not provide discounts without receiving specific feedback on the quality issues in question.” Now rather than being the bad guy for the client, you can be the good guy who can take the position of actively helping them to work against company policy to get the problem resolved. 

This technique is especially useful if it is important that you salvage your personal relationship with the client. 

It doesn’t matter who is right.

The last thing I want to talk about now is th most important. You made a mistake. Your client made mistakes. Other people surely made mistakes. This all matters of course to understand where the fault lies and so what should be done. But focusing only on who is right and who is wrong prevents you from taking a more unbiased approach to the situation. 

What matters more than who is right is how the client feels. The client feels they are right. The client feels they deserve a 50% discount. It doesn’t mean they are right. But that is how they feel so we just need to recognize that. 

This means that if we do decide to push back, we need to do so in a way that recognizes how the client is feeling. It doesn’t matter what we are feeling. We get to put our ego on the shelf and address the client’s needs. This can be really hard to do, but if you are able to put your own thoughts of right and wrong aside, it will help you have a clear head to continue doing your job, which is to add value to your clients. 

So now let’s take a look a very simple example responses to the client. 

In this example, we are not giving anything away for free. It may seem like we are because we are not pushing back on the 50%. However, all we are doing is asking for them to provide the feedback. If they don’t provide the feedback, we don’t update the invoice. Sure, they may not pay it… until they need our help on another project. 

To advert blame for being inflexible away from ourselves, we are blaming some unnamed department to which I will submit the feedback for approval. I love doing it this way because it implies a bureaucracy that may or may not exist. 

I’m ending by saying “The sooner I get this, the sooner I can push the request through,” which is heavily implying that we are on the same side! I’m going to help my client fight against the big bad bureaucracy! (Little do they know that it is just me who is deciding not to discount the invoice). 

Lastly, this email avoids blame. It recognizes that there were challenges with the project but avoids the trap of trying to assign guilt. It doesn’t matter who is right. It matters what you are going to do moving forward.