I had the pleasure of attending a workshop presented by TheKnot.com discussing how to avoid discounting. Interestingly enough, the workshop wasn’t about “how to charge more”. Their message was meant to appeal to both the vendors who make up the upper echelon, as well as those who appeal to couples in the budget category. There was a lot of valuable information presented, and I thought I would share some of the details with all of you. No matter what we charge, negotiating has become commonplace these days. The content in the presentation was prepared by Wedding Industry Rescue, though I found bits and pieces of information that were discussed that were also part of an article published on Hubspot here.
Why Consumers Might Ask for a Discount
- With mini portable computers at our fingertips, consumers have immediate access to more information than ever before. They are educated about negotiating tactics.
- Your competitors offer products and services at lower prices, and your potential customers are aware of your competitors rates.
- You’ve made a lackluster first impression with your outdated website, market materials and other online presence causing your potential customers to have a lower perceived value of your product or service.
- Experts say that it takes 2/10 of a second to make a first impression.
- Experts also say that it takes 8 additional good impressions to overcome the first impression.
Why Do We Discount?
- Believe in yourself, believe in your price.
- Know your target market and go after them. Are you casting a wide net to catch every fish in the ocean? Or, are you throwing in two or three lines to catch only one type of fish?
- To Stay Competitive
- Know who your competitors are and what they charge. Your competitors aren’t necessarily the vendors that offer a similar service, they are vendors that offer a similar service to the similar degree that you offer. Four Seasons and VFW both provide reception venues. They are not competitors. They don’t charge the same rates.
Why You Should Not Discount
- Sets a bad precedent.
- As soon as you offer a discount, you can’t go back. Once a potential customer or client knows that you’ll offer a lower price, they’ll expect it the next time. And, they will tell all of their friends and family that you are willing to negotiate or offer your service for less. If you set up the expectation that you offer the same discount during a particular time of year, your referring vendors will wait until you run your annual sale to book your services. Example: A linen vendor in the Southern US offers 50% off from September through January every year. But her business begins to die as soon as February rolls around. Why? Because every event planner in town knows that she runs the same sale every year. They wait to refer clients or book her services until her sale begins.
- Lack of confidence
- When you don’t believe in yourself, you won’t believe in your product, your service or your price. If you don’t believe you are worth your price, your clients won’t either. As soon as you offer a discount, your client immediately loses confidence in you and sees that you don’t stand wholeheartedly behind your product or service. Don’t give your clients a reason to doubt you or the product or service that you offer.
- What is going on in the back of the customer’s mind when you offer a discount to save a sale after you’ve laid out your standard pricing on the table and told them this is best that you can do? Will they think “He just told me that this was the best that he could do, and then he lowered his price when I was about to walk away. What else is he hiding? What else can I get?” Don’t set yourself up for mistrust with your clients.
- It Damages your Brand
- Don’t be known as the discount queen. Build your brand in such a way that people value you what you offer and are willing to pay the price for it. They will tell all of their friends and family not to pay your regular rate because they were able to negotiate XX percent discount.
- Lower Perceived Value
- People value things based on the price, yet as a salesperson, it is your job to show the value of your service in other ways. Of course you won’t say that your product is the best because it is the most expensive. Your job is to demonstrate how your service can bring something special to your client’s event, to make it not just good but the best. If you go to the customer with a discount in hand, you’re discarding the value of your service. While the customer may still work with you, they aren’t going to place as much value on your service as they might have before. Thus, when budgets get cut, you may also get the ax. This is especially the case when you don’t ask for a large enough retainer to book your services.
- The Profit Loss
- When you continually discount your service, you are cutting in to your bottom line. To make enough money to be profitable and grow, you’ll either have to do more events for less money or learn how to start standing behind your product and service to get the price that you desire. When you have to take on more to stay in the black, you’re going to be rushed, stressed and feel the need to continue booking more jobs to make it all work. That’s when you find yourself casting a very wide net to catch every fish in the ocean. You’ll be pressured to continue to discount, thus starting an endless cycle leading to burn out.
I’ve seen a lot of businesses in our little industry come and go because of the discounting that goes on. They work themselves silly for far too little and realize that it isn’t worth the time, effort and frustration to maintain their businesses. Their light flickers out. If you don’t value yourself, your time and your energy, no one else will. Charge what you’re worth and don’t allow others to dictate your value.
We’ll be back next week with more details on how you can avoid discounting.