When and How Independent Professionals Should Offer Discounts
Whether you're looking for a method to grow your business, you might have thought about offering a discount on your services.
Only a big, established company should discount its services; it is usually better to gain new business through quality work and a solid marketing strategy rather than slashing prices.
Here are three risks to consider, as well as solutions and choices for when you want to run a deal.
If you’re looking for a way to boost your business, you may have considered offering a discount on your services. After all, what’s more enticing to customers than a good sale? But when it comes down to it, is discounting really a smart way to bring in more clients?
Unfortunately, unless you are a large, established company, discounting your services can often do more harm than good. Typically, it’s better to gain new business through quality work and a solid marketing plan rather than through slashing prices. While there are downsides associated with discounting, there are certainly times when it is appropriate as well. Here are three risks to consider along with solutions for when you do want to run a deal.
Risk: Offering a Discount Can Lower Your Brand Value
Discounting can carry certain connotations that you may not want associated with your business. Often, expensive products and services are simply perceived to be higher quality than lower-cost ones. By offering a discount, you may be unintentionally telling your clients that what you are offering is not really worth the higher price—or that no one is willing to pay a higher price.
Solution: Proceed with Caution
Making a discount part of a campaign to promote your business can be helpful if you are just getting started or if you’re looking to expand. Tie in your campaign to an upcoming holiday or time of the year, such as a “Spring Special”. Make sure the campaign runs for a limited amount of time and promote it on social platforms, among current clients, or through local media in the weeks leading up to it. This will help to get the word out about your business and put pressure on clients to take advantage of the deal when it runs.
Risk: Discounting Can Lead to Lower Quality Work
Even if you promise yourself it won’t happen, running a discount often means you’re bringing in less money and having to cut back on the time you can devote to any one project. Providing anything less that your best work reflects poorly on your business and can lead to fewer long-term or repeat clients, so be sure to exercise caution when marking down prices.
Solution: Start Small and Set Parameters
Consider offering small discounts aimed at gaining repeat business, such as a percentage off a client’s next project to encourage them to return. Bundling packages of services in order to obtain a discount can also be effective as it raises the value of the transaction. When offering any sort of mark down on your services, be sure to set clear parameters ahead of time so clients know what to expect. Perhaps a discounted service includes a few set designs to choose from, or one complimentary round of changes. This way, if the client deviates from these parameters, you have a right to charge them accordingly.
Risk: Lowering Your Prices Can Attract Different Types of Clients
In order for your business to grow, you need to attract more clients who are willing to pay full price. By offering a discount, you may instead attract clients who are just looking for a deal and who will not necessarily remain loyal to you if they find a cheaper offer somewhere else. On top of this, you run the risk of existing clients growing accustomed to lower prices. They may not be happy returning to paying full price once they’ve seen that you are willing to negotiate.
Solution: Make Sure You Benefit Too
It’s not uncommon for a new or repeat client to ask for some sort of deal. When this happens, consider exercising a give and take approach. Ask for something in return such as an exchange of service for something the client’s business provides, or, consider asking them for a referral or review of your business on social media once you’ve completed the project. Other solutions include asking them to pay upfront, only discounting certain services, or making the work a bulk order.
While discounts aren’t always in your best interest as an independent professional, there are ways to make this strategy work. However, no matter which tactic you choose, always exercise caution. Discount too deeply or too often and you begin to run risks. Be sure you know what your services are worth and always create a detailed plan when you decide to offer a discount.
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