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Back a few years ago I was a frequent buyer of art supplies. I especially liked an online store because of their unusual stock. But this store lost my business, and it did that by, oddly enough, offering too many discounts to me.
Here's what happened. After my first purchase I started receiving frequent emails offering discounts. They ranged from 30% to 50%, and often came with free shipping. But what I noticed was that while almost all of them had a 24-hour deadline for use, the very next day I'd get an email extending the deadline and offering even more of a discount.
In essence, the early buyers got a raw deal. If I believed that their discount code was only good for the 24 hours they stated in their ad, and I placed an order, I discovered that I could have ignored the first email, wait until the next day, and get 50% rather than 30% off my order.
In the end, I never trusted that I was getting the bottom line deal. And I never was willing to pay full price for anything, either. If they announced a deadline, I couldn't trust that the deadline would be extended, often with an even better deal.
I see internet marketers teaching their clients and customers to wait for discounts, too. Sometimes the discounts are so huge they seem cheesy and dishonest to me, but that's really not the point. The point is that when we do this type of thing we literally teach our clients and customers to wait us out. We become a commodity instead of a solution to a problem. We are not seen as someone who offers help with a transformation that is often priceless.
I especially see this from some of the people who offer live events. Here's what happens. Almost a year out, you'll get an email offering you an “early bird special.” After a certain time, the ticket to the live event will go up in price, you are told. But wait! If you will watch your e-mails you'll often see that the “deadline” for the early bird special has been extended, usually for some lame reason like “I was afraid some of my readers didn't see my first e-mail.”
If you keep watching, you'll see that when the event date gets closer the discounted tickets to attend are often even cheaper than that “early bird special” was back six months ago. Or, the ticket price is the same but you can now “bring a friend for free” which means, of course, that the ticket's value has just decreased by 50%.
I get that they want butts in seats – and would rather almost give the ticket away than have a half-filled room. It's a good strategy, because the more people at the event the more possibility you have to do an upsell to more services. But what they've just done is train you never to pay their full price and to wait until the last minute to buy.
I see this offered in coaching services, and in other professional service areas. We, the sellers, have actually trained our buyers to wait for a discounted offer. Here's a few examples. A massage therapist tries to build practice by offering a free massage for every 3 you buy. This essentially discounts their service by 25%. In a few months that massage therapist wonders why she is working her butt off and still not making enough money to pay her operating costs and her living expenses. I've seen more than one massage therapist actually discount herself right out of business. Coaches are bad about doing this, too.
Here's the deal. Once you have trained someone that your services are worth 25 or 30% less than what you have on your website, they will simply wait for another discounted offer. You have devalued yourself.
My recommendation is to forget about discounting and instead offer an added value. This changes the perception of you completely. Instead of attracting the discount shopper for your services or products, you'll attract clients and customers who love that you add on a bit of value that they would otherwise pay more for. If you are a massage therapist, don't lower the price of your massage. Instead, offer to add in aromatherapy or heat therapy, something that you usually have a slight upcharge for. If you're a coach, don't discount your packages. Instead, offer to add in a monthly Q&A call for everyone who is coaching with you as a group call to share experiences and network.
Here's my rule of thumb…..look up, not down. Look to add value, don't look to discount value. Train your clients and customers to look for the upsell, not for the discount. If you do this you'll keep adding to your income and your perceived value. It's a double win for you, and it's a win for the client, too. They get to experience something they otherwise would not get, learn about what else you offer. You get to charge your fair price, and show off what else you can do.
Pricing well means that your ego has not inflated what your product or service is worth, you know your costs cold and pay attention to them, you discern a fair price based on customer input, your experience, and demand for what you offer. Make note that if you have to CREATE demand you will not be able to price your product or service as highly as YOU might think it is worth. However, if you price wisely, educate potential customers, and build a business from that base you will one day be able to charge more. Why? Because, you have successfully and faithfully created MORE perceived value.
I realize there are strategies for “loss leaders” and getting people into the marketing funnel. But as a small business you do not have the deep pockets of a Wal-Mart or a Sam’s to offer super-low cost and freebies in order to gain customers. If you decide to do this, be cautious, wise, and infrequent.
Keep in mind that if YOU don’t value what you do, your customers won’t, either! Aim for a fair price, give outstandingly fantastic customer service, work consistently, and your business will grow.