When you're an entrepreneur, there are lots of occasions when you might be tempted to offer a discount. You're new to the business and looking to get some exposure for the work you do, for example. Why not offer a couple of freebies? Or maybe you're looking to jumpstart some word-of-mouth on your new offering. How about a giveaway?
But all of these impulses to lower your prices to attract attention and customers share the same fatal flaw, according to a post from small-business expert John Jantsch on blog Duct Tape Marketing recently: Giving things to people for free teaches them to undervalue your work.
So Jantsch promotes a no-discounts policy then, right? Not at all. The essential problem isn't lowering prices; it's the underlying lesson it teaches. If you ensure that the person with whom you're cutting a deal has a crystal-clear sense of the value of what you're giving, discounts or even giveaways can be smart. "When someone makes a request," he instructs, "think about exchanging value in a set way rather than saying yes and hoping something comes of it." What does that look like in real life? Here are a few of Jantsch's examples.
1. Name your price
If someone asks you to do something for free in exchange for exposure such as speaking at an event, never simply say yes without making sure to spell out the nitty-gritty details of what both parties are getting out of the deal.
"When someone asks you to speak to their lunch group, agree to do so willingly if you think it's a fit, but also communicate that your normal speaking fee is $2,500 and in order to waive that fee, you would like the ability to very casually educate the audience on your services," Jantsch explains. You're aiming both to make sure the other party knows your value and that you know what you're getting out of the opportunity, be it a booth to showcase your products, an opportunity to collect interested attendees' contact details, or whatever you feel will benefit you most.
2. Ask for a shout-out
If you have a brand-new service and want to seed the market with a few satisfied customers, don't just hand out freebies. Make sure you're getting the promotional push you'd like in exchange. "Offer a smoking-hot deal in exchange for a full-blown case study and testimonial video, assuming they loved working with you," suggests Jantsch.
3. Barter with other businesses
Need customers to test out a new product and spread the word to their friends? Your fellow business owners might be just the ticket if you're offering something they could use and they're selling something you want. "Reach out to a handful of like-minded businesses and suggest a barter arrangement. That way you receive value for your product and perhaps initiate a few long-term strategic-marketing partner relationships," Jantsch advises.
Are you too quick to offer a no-strings-attached discount?