The topic of discounts always creates interesting conversations in business. First we’ll discuss free services. The concept of free offers is especially complicated. Free does not attract everyone. People value different things and free does not serve everyone. The vast majority of people don’t care if you offer free classes or lessons. They just simply don’t want what we are offering.
Some people are repelled by “free”. They will think it’s a gimmick or a bait and switch. These people will be willing to pay for excellence. If we are excellent, we will create the right demand and then and only then, we can charge the proper fees.
So we must determine who really wants what we offer and are willing to pay for it. Who, within a 5 mile radius is willing to pay for our programs and services? Who shares our values? That’s who you should look to find.
When is free a good idea? Some examples are:
1. Enroll for 12 months and receive 1 month free
2. Buy 2 units and receive the 3rd free
3. Enroll 2 kids and the 3rd is free
The concept of discounts are straightforward – we give the student something (discount) and the student gives us something (easy enrollment, quicker enrollment). This will provide a reason the discount is offered, which is a buffer against cheapening our services and products. You must mention the discount to everyone: “If you re-enroll today (3 months early) you’re receive a X% discount…” Some other options are bringing in referrals, offering added months, buying uniforms and equipment, etc.
One thing we must NEVER do is discount tuition because the customer is a strong negotiator. Be sure of yourself and your product. Ultimately we must search out buyers who are willing to pay for value.
Overall price discounts are good. However, you should be careful. Too many discounts, too often can be disastrous to your business. Most studio owners offer discounts too casually and without much thought. When we offer discounts we are only selling on price, not value. To maintain higher prices we must be exact in communicating value. Discounts ultimately erode that if you’re not careful. When we offer discounts the same customer will want it again and again. And may even be mad when you try to re-enroll them at the current rates.
Discounts can also result in dissatisfaction with other students asking “why didn’t I receive a discount?” If a student recently paid a premium price and then hear others got discounts that can lead to mistrust in the studio. It is recommended to provide discounts at special times. For instance:
* Introduction special rate
* Family Plan
* Payment in Full
* Additional years for enrollment
* Re-enrollment early
It’s important to offer the same discount to everyone. Remember, everyone wants a discount. Be as fair and firm as possible.