If we lower our rate in front of the client (eg: “I can give you a lower price if you’re in a sticky situation”) we are saying “this is not what my service is worth and I might be worth even less”
The response to “Can you do it for less?” Is “I can do less.”
Yesterday I wrote about determining the value we offer. That’s the most helpful approach to giving a discount. We figure out what value we offer, then set a price based on that value.
If we set a price, then offer a discount, we’re negotiating against ourselves.
We’re not just lowering the perceived value, but the actual value.
Everything’s value is based on an agreement, not on omnipresent rules of the universe. When our prices are set in stone, it gives consumers or clients a chance to understand and appreciate our value. It gives them the comfort of our leadership. It gives them an understanding that nothing is owed. When we feel like we maybe didn’t get the best price, we question the value of the thing we bought endlessly and our experience is diminished. When we know we’re in an expensive car, it feels expensive, it’s rewarding just in the expensivicity of it.
It seems like a gift to give someone a discount, but it’s usually the opposite.
I’ve seen entertainment providers mess this up a lot
- State their price, but say they’re willing to do it for less.
- Offer a discount code for ticket sales on the front page of their websites.
- Put discounts on fliers just because they think it will help get more sales.
- Put tickets on groupon.
- Offer discounts to compete with services of other companies.
Good discounts Exist
If our margins are so fat that we can give a discount and still make a solid profit on a discounted sale, it may be an opportunity to lower our prices anyhow…
Here are some examples of helpful discounts…
- When a potential consumer will save us money on fixed costs. (eg: block bookings, buying in bulk)
- When connecting with a group will save us on advertising. Groupon cuts our revenue down to 25%, and the Grouponers are usually sucky customers that won’t come back for full price, but other groups that request a small discount for access to their tribe can be great.
- When we change the value of our offering to make it simpler (eg: beta testing, removing commitment / guarantees, lessening work)
- When we get something besides money from the client or the situation (eg: we are given a sponsorship package, we are promoted by the client, we get perks that save us money)
Lose customers by avoiding discounts
We lose customers by offering discounts and by not offering discounts. Nothing is for everyone. We gotta pick our strategy carefully. If we want people to appreciate what we do as much as we do, discounts are not the way.
If we want to tread water and struggle in the fog of our value, arbitrary discounts are the way to total success!