3 Reasons When Offering a Discount May Be Appropriate For Your Small Business

discountIf there was ever a word that I have a true amount of disdain for it’s this one.  I mean, every time I hear that word cross someone’s lips, I tend to feel my skin crawl a little, yes, it bothers me that much.  The word to which I’m referring:


When I think of discounts, I immediately think of companies [or individuals] who have made a decision to never be seen as an exclusive offering in the marketplace.  And while there is nothing wrong with deciding to hold that space, I still don’t like it, especially not for the 22 million non-employer businesses out there of whom 60% aren’t exceeding $25,000 a year in their businesses. (Part of the reason they could be stuck in this 60% is because they haven’t aligned their value to what they charge for their offerings.)

I’m sure you wouldn’t be surprised if I told you that the question I’m answering in this week’s episode of Incredible Factor TV is one that I get at least once a week.

So, when I got the question AGAIN from Sheyenne, I decided to go ahead and answer it:

“Hi Darnyelle.  I hear so many different perspectives on offering discounts for your products and services, but I’m very interested in what you have to share on the subject. So my question is  – is it ever okay to discount your services?”

Watch my response to Sheyenne’s question here:

Is it ever okay to offer a discount….yes and no… let me explain:

You see, in my opinion, discounting your services to get attention in the marketplace is a pricing strategy that can work for you IF you decided to lower your prices STRATEGICALLY.  The reason to lower your prices is to gain market place traction when you have access to a large volume of sales to offset the lowered price BUT without a strategy to turn those discounted sales into valuable clients at your full value, you waste time, energy and position yourself as an amateur.

Sadly, most lower their prices and offer discounts because they lack a commitment to their value and worth.

That’s exactly why I called it a loaded question during the episode. I’m sure there are reasons when discounting your services makes sense (in fact I will share three of them with you below.)  I have to be honest and say that if you’re a service-based business owner, I would likely advise against using that pricing strategy in your business. I would, however, question the REASON for the discount – is it because you’re getting desperate because no one is buying at the full price that is valuable and you’re starting to question whether you can REALLY charge that much – and, if so, that means you’re likely experiencing a “message to market” problem.   You’re trying to serve a market that can’t afford to hire you and your message is speaking to them versus connecting with those who can afford to solve the problem.

Still, there are times when discounting your prices may be the right thing to do.  Here are a few instances when I believe it’s OK to discount:

  1. Discontinuation of a product or service – if you’re getting rid of an offering and making it available one last time to clear out your inventory because it’s been sitting around collecting dust, you should discount it in an effort to recover some of your expenses.  At this point, you’re putting the item on clearance.  While clearance is typically reserved for the retail business space, it’s an effective strategy to use to clear out an old offering. The fact that it’s taking up space is reason enough to reduce the cost and appeal to those who may not be able to work with you or afford your higher-end services.
  2. A passive or leveraged offering – if you are bringing a service or product to market that is highly leveraged or passive in its entirety, discounting it will not hurt you but it may help you.  Now, in order for this to work, you have to have a plan in place on how you will capitalize on the reduced offering price point.  And here, you’re going for volume and the fact that you’re sharing your time amongst multiple people.  If you use this strategy effectively, you can gain significant market penetration and a large volume of sales and cash flow.  Can you say ca-ching?! But, you must also be clear that many of the people who purchase it will never pay for it at full price.  When I think of things I see on Groupon or Living Social over and over, there is an entire breed of consumer who will never pay regular price because they know it’s just a matter of time before someone else will be offering it as well. When you are working one to many, you can reduce your costs and still make out well with that pricing strategy.
  3. An introductory offering – if you are introducing a new offering to the market or know that there is value in allowing people to try before they buy, using a lower priced introductory offering can be very effective.  My upcoming Magnetize Your Marketing Master Class is an example of this. While the content that I will share is highly valuable and could easily cost several hundred dollars, I am offering it as an introduction to my award-winning system for helping small business owners create magnetic marketing.

Again, there are times when it is appropriate to discount your services.  BUT my recommendation, is to NOT become a business where NO ONE ever wants to pay full price because you’re known for consistently discounting your services and having a “one-day sale” that is really a 2-3 day sale. As I’ve shared in other episodes, there are various pricing strategies all with pros and cons that can be an effective way for growing your business.  As with anything though, you need to be clear on the who, what and why of your offering so that you can assess the value and price it accordingly. When you join me for the after party, I will share a little bit more insight into why those who offer discounts may do so.

So, is it ever okay to discount your services – yes and no but you need to be clear on the strategy on the front end of the discount so that it does what you’re wanting on the back end.

Now I want to hear from you, what’s your two cents?:
When do you offer a discount for your services?  Is there a strategy behind the discount or is it out of fear?

©2014 by Darnyelle A. Jervey, MBA. All Rights Reserved. Darnyelle A. Jervey, MBA, The Incredible Factor Speaker, Business Coach and Marketing Mentor, is the founder of Incredible One Enterprises.com, Incredible Factor University® and the Leverage Your Incredible Factor System®, a proven step-by-step program for more clients, more income and more leverage in your business. For more information and a FREE audio CD “7 Critical Mistakes Entrepreneurs Must Avoid When Unleashing Your Incredible Factor So You Attract More Clients, Make More Money and Gain More Leverage” just fill out the form below.

move to millions

Leave a Reply

Your email address will not be published. Required fields are marked *