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Why you should discount discounting

For many years, price discounting has formed the marketing plan of countless Australian businesses. But it is increasingly becoming a tactic that polarises marketers with many believing it’s an ineffective way to promote a product or service. I am one of those people.

Discounting is something I tend to discount (no pun intended!!) for my service-based clients.

Here’s why:

1. It can devalue the service offered

Would you ask a medical specialist to discount their fees? Me neither. If I did, I would worry I would receive a lesser service than if I paid full price.

By offering a discount on your services, you run the risk of clients – and potential clients – thinking they are not getting the best of you. By discounting, you effectively lessen the significance and worth of your service.

2. It makes returning to regular prices difficult

Discounting your services might bring new customers to your door, but you run the risk of them expecting to pay that price ongoing. You also run the risk of giving your customers the impression you can produce the same quality of work for a cheaper price – something they may continue to demand. Discounting can also give customers the impression that your regular prices are too high.

3. Your time, experience and knowledge are your greatest assets

For service-based businesses, your time, experience and knowledge are what set you apart from your competitors. They are your greatest assets, and it is these that bring results for your clients. I don’t believe you can discount on these things.

4. It may attract the wrong customer

Discounting your prices may attract customers who are only there for the cheap rates – and will leave as soon as they return to normal. These are not the customers you want. You need to attract, and retain, clients who value your time and knowledge – and are happy to pay for it.

What are the alternatives to discounting?

1. Value adding

Instead of reducing the cost of your service, I recommend a value-add. Run specials where clients who buy a particular service receive a bonus for their loyalty.

This can include:

– Two free hours of your time for those who pay for a full-day’s service

– Free audio tutorials

– Newsletters containing free tips and resources

– Invitations to attend workshops and events

– A free appraisal

The list is endless!

2. Create packages

To reward loyal customers, create packages (that include your value-adds).  Creating a package that offers more than your normal hourly service will continue to add value and credibility to your business and brand.

For example, you may offer a monthly consulting rate. Entice your customers to book a three-month package by including three months of consulting… plus a free appraisal of their business…plus an invitation to attend your next workshop.

Packaging your services together can make your customers feel valued as they are not only receiving your time and advice…they also receive free valuable resources.

3. Hold one-day “sales”

A sale doesn’t always mean a discount. Consider timeframe incentives to reward loyalty. For example you could offer a “book today to attend our next seminar and we’ll give you a free copy of our best-selling book”.

Rather than offering a discount, you are instead rewarding those customers who make quick decisions and take decisive action about your services.

So, is there any room in the marketing mix for discounting? Nothing is black and white so there may be times where discounting is necessary. While the above arguments focus mostly on service-based businesses, there may be occasions when product-based businesses need to discount. A perfect example is when a retailer needs to move excess or close-to-use-by-date stock.

But, I encourage everyone to think outside the “discounting” box. Give it a try. You might be surprised

Michelle Gamble

Michelle Gamble

Michelle is the Chief Angel of Marketing Angels, an entrepreneur who has built Marketing Angels from the ground up over the past 10 years. Marketing Angels has grown into one of Australia’s leading marketing consultancies providing marketing education, advice and outsourced marketing management to business. Michelle claims she's a bit of marketing geek, having started her marketing career in telecommunications and online working for both Telstra and Optus before starting Marketing Angels. Michelle is also a busy mother to 3 children, and lives in Manly NSW.

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