I think the practice of discounts destroys a lot of businesses. So I want to talk about why I feel that way and the psychology of a discount for a moment. First off, don’t fall for the discount trap. There’s no need to offer a discount. What you’re really doing is reducing the perceived value of the service or the experience that you offer. What we really need to be doing is going the other direction. We need to be increasing the value of that experience, not decreasing it. So by discounting, let’s say it’s a $50 product and you reduce it to $40 now the value of that product is $40 so if someone else comes in that knows about that sale, they expect to pay $40 not $50 whereas if that discount had not been offered. Most people would have assumed the value of $50 like you’re asking.
I always tell people, when I see an ad for something that $1,000 or best offer, that means I can bargain. That means they know it’s not worth $1,000. I want you to set a price and stick to it. If you want to offer an incentive for your customer, I want you to go the other direction, give them something extra for their value. So for example, if you sell a piece for $50 and you want to do some sort of promotion, offer them that piece for $50 and give them an add on for a reduced price or for free that makes the value of the piece still be $50 and they feel like they’ve got something extra from you, not a reduced something or a reduced value of their experience in your studio.
So do me a favor, help me in my pledge to the industry to get rid of discounting. We don’t need it.
Let’s talk about why you offer a discount. In many cultures, discounting and bargaining is a fact of life. They feel like they can’t buy anything unless they bargain. That is not our culture in the US. We don’t have to use that same culture here in our businesses. I want you to be proud of your pricing and have your experience in your product in your studio and stick to it. So the next time you’re asked for a discount, the reason that you offer them is because you don’t want to say no. I want you to learn to say ”no”. Don’t be afraid of it. I promise you people are not going to leave your studio because you don’t offer them a discount.
If they do, they were not your target audience. If your target audience is completely based on offering discounts, you are not building the value in your studio. There are many people out there who would never dream of asking you to cut your price or offer a discount. In fact, most are willing to pay you more than that price you have on the shelf or on your listing.
So stop offering discounts, switch your perspective, offer something extra in value rather than reducing your value. Think about this and tell me how you think it would work out, or if you have a problem with it, let me know and I’ll be happy to help you walk through that thought process and change your mind of why you think you need discounts.
Donna Bordeaux, CPA with PYOPAccounting.com.
Creativity and CPAs don’t generally go together. Most people think of CPAs as nerdy accountants who can’t talk with people. Well, it’s time to break that stereotype. Lively, friendly and knowledgeable can be a part of your relationship with your CPA as demonstrated by Donna Bordeaux and PYOP Accounting.com. Donna and her husband, Chad, who is also a CPA, have over 50 years of combined experience as entrepreneurial CPAs. They’ve owned businesses and helped business owners exceed their wildest dreams. They have been able to help PYOP studios earn 4 times more profit than the average PYOP and are passionate about helping industries that help families build great memories.
