Should I offer a discount?
The Negative Effects of Discounts on Services
Discounts seem like a great way to attract new business and reward loyal customers. However, discounts can actually have a negative effect on your business, especially if you're a small business owner.
Here's why you should never give discounts for your services.
1) Discounts encourage bargain hunting
Discounts train your customers to wait for a sale before they make a purchase. This bargain hunting mindset will prevent them from valuing your services at their full price. Over time, this could lead to customers only returning to you when you offer a discount, which is not sustainable for your business.
2) Discounts can devalue your services
When you offer discounts on your services, you are essentially telling your customers that your services are not worth the full price. This can have a lasting effect on how people perceive the value of what you're offering. Once customers have been trained to expect discounts, it will be difficult to increase prices without losing business.
3) Discounts can erode profits
Small businesses in particular can't afford to discount their services without eating into their profits. If you do choose to offer discounts, make sure that you're doing so strategically and only for short periods of time. Otherwise, you run the risk of damaging your bottom line and harming the long-term health of your business.
Discounts might seem like a quick and easy way to attract new business or show appreciation for your existing customers. However, discounts can actually have a number of negative consequences for small businesses.
From encouraging bargain hunting to eroding profits, there are many reasons why you should think twice before offering discounts for your services.