“If I reduce my fee, I’ll take more bookings and make more money.”
“If I reduce my fee, I’ll take more bookings and make more money.”
This statement assumes…
- People buy on price.
- Cheaper price means more profits.
Will you really sell more? If so, will you make more money?
What you need to consider is that your expenses to provide the service remains the same, the discount is taken solely from your profits.
If your booking sells for $200 and your expenses are $50. You’ll then make a profit of $150.
If you give 25% discount, you make $100 profit. So to make $300 profit, you must now sell 3 bookings instead of 2. Will you sell more bookings to compensate?
Discounting is a practice that has spread through the internet with eBay and last minute deal sites.
It can work as a lead generation strategy if you have financial back-up or sell from the platform. It can also be used for a ‘last time offer’ training or speaking event.
But you’re on shaky grounds if you intend to use ‘discounting’ as a long term marketing strategy for extra bookings. You may be spiraling down and squeezing yourself out of the market.
Here’s why.
Discounting…
- Cheapens your product. Your unique course is downgraded to a commodity. Your ‘life-enhancing’ course becomes a mere transaction.
- Reduces your profit margin. How will you generate the income to grow your business and fund your desired lifestyle if your profit margin is eroded?
- Raises doubt in the mind of clients. Was the service overpriced in the first place?
- Attracts bargain hunters. At any time, those clients will defect for a better offer. By charging two different fees for the same service, you are at risk of losing loyal full fee paying clients who represent a better lifetime value.
- Reduces the number of full fee bookings. “Why should I pay full price? I’ll wait for a last minute deal.” Even worse, you might miss out on the booking once the buying impulse is gone.
As a rule of thumb, avoid discounting your speaking, training or coaching program unless you clearly state that the situation is a one-off, not to be repeated offer. And stick to your word.
Discounting can have a direct negative impact on the profitability of your business. Charge what you deserve!
Download 24 Powerful Offers to Double the Value of Your Training for free (see right sidebar). Discover ways to increase the value of your speaking, training or coaching business instead of discounting.
Filed under: Pricing Strategies
