Why You Shouldn't Discount Your Rates

Everybody loves a discount. I mean, why wouldn’t they - a deal’s a deal, right?

Hang on a minute, there.

Let’s say you sell cupcakes. Mighty fine cupcakes. You sell your mighty fine, scrumptious, yummy, ecstasy-in-a-paper-thingy cupcakes for $5.50. Each.

But today business is a little slow, and a wild and crazy idea hits you: You’ll put your cupcakes on sale for 99 cents.

So you put the sign in your shop window and before you can say ‘supercalafragalisticwhatchamacallit’, you’re swarmed with customers coming in for 99-cent delights.

At the end of the day, all the cupcakes are gone, and you’re happily counting your cash.

The next day, it’s back to Deadsville. Business is quieter than a spaghetti-western ghost town. The worst part is that business stays that way for a week, two weeks… with only the handful of regulars trickling in.

So what happened? Why on God’s green earth didn’t all those sale buyers return for more of your nummy yummies?

Because they’re waiting for the next fantastic deal, that’s why. That's what happens when you chop your rates and attract bargain hunters.

Bargain hunters love bargains more than they love cupcakes. Even yours.

Now, wouldn’t it be better if people came in regularly for your cupcakes instead of your deals? You bet it would.

The same thing goes for your therapy practice – you want to attract clients who like therapy more than they like bargains.

Retail me not?

If you absolutely, positively must offer some kind of incentive to entice clients through your door, use a third party to offer the discount, like Groupon, Living Social, Retail Me Not, WagJag, Woot, and other discounters. They've sprung up everywhere like dandelions, so you’re sure to find one in your city.

Using a discount service like this doesn't make your business look desperate for clients.

Plus, using a time-sensitive discount site buffers you from price erosion, something that’s nearly impossible to recover from. Once you start discounting rates, people start to wonder if they were worth what they were originally paying for in the first place… and then you have to keep discounting to keep them coming in.

UPDATE: I no longer suggest this path of 3rd party deal services. Read about this Goupon cupcake disaster. Chances are that wouldn't happen to a massage therapy business, but still - it proves my point that you are better off just saying no to discounts.

You’re a therapist, not a Walmart.

You went into therapy to be a healer, not because you hoped it would be a cash cow. Which means you might want to help those truly in need because this makes you feel better and more fulfilled about what you offer.

You can help others, but don't do it for less -- do it for free. Donate your time to a cause, retain your value and help those who really need the help. Just imagine how much good you could do – and how great you’ll feel - by donating one or more free sessions a week to a local fire house, a women’s shelter, or any another cause you choose.

It's not hard, either. Pack up your gear and volunteer a few hours a week out of your personal time to helping those that can’t afford your services otherwise.

And the bonus is that you'll be doing marketing without even knowing it – other people who can afford your services will see you helping others, learn about the help you offer and think well of you for giving generously of your time.

No discount required.

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Comments

Yes, I absolutely agree! You are a valuable asset to your company, many times you're the only one! Be fair to yourself and get paid what you are worth. Market to the customers that would pay the $5.50. They are out there! Great post!

AGREED!!! Not to mention working for free if you are giving everything away!

That's exactly why I haven't had a sale since I opened my shop! I barely make a profit as it is.

You were right Leigh- I'm very interested in this post! I love your idea of donating service instead of discounting it; I think it's such a great way to contribute with demographics who couldn't necessarily afford the service while also marketing ourselves. Discounting therapy would feel very strange to me, I think; I would worry that it might inadvertently make a comment on what I felt the value of the work was. I'm wondering what your thoughts are on folks who work on a sliding scale; I know quite a few therapists who do that as well.

Wow, awesome blog layout! How long have you been blogging for?

you made blogging look easy. The overall look of your website is fantastic,
let alone the content!

leigh's picture

The best sliding scale use I've seen, Heather, was at a community style acupuncture clinic here in Philly -- the group setting is beautiful. The sliding scale is upfront -- not a hidden "maybe you qualify, maybe you don't" sort of surprise. Actually, I have a post coming up on this space ( shouts out to Ellen!) but it really is a top-notch experience at an affordable price -- and it's jam packed with adoring clients!!!
http://www.phillyacupuncture.com/

Also, if your core client base struggles financially you can also hold more group sessions for a much reduced rate - that way the cost is spread between participants, you get paid for your time and you get to help more people than you would in with individual sessions. One full hour of any one persons undivided attention is expensive -- the question is, how can you divide that up and still deliver meaningful, quality care?

I suggest studying models of group systems to find out what works best in a particular therapeutic context.

Great analogy with the cupcake sale. I confess I often frequent certain places ONLY when there is a good bargain. However, I really identify with this post because, in my trade, there's a continuing battle for clients, some of who try and devalue my work to cut costs. Sure you can get a ton more gigs rolling over and probably make more money total but this often comes at the expense of more stress, less fulfillment and all those other intangibles.

How to give a discount without it seeming like a discount....
At our dentist, Dr Hoover, he has a large fishbowl by the entrance window of his office.
Every time you have work done, be it a cleaning or a filling, whatever, you automatically put your name on a small piece of paper (he has a stack of them plus a pen in a box) and fold it up, and drop it into the fishbowl.
Every week, his secretary pulls out one lucky winner, and that patient gets half off the next cleaning, or 4 tickets to the local movie theater. I won the second time I had work done, and accepted the 'entertainment package' instead of the cleaning one! (Like who wouldn't?!)

So a therapy practice could have something along these lines, so that a patient would have one chance in 100 of winning half off their next therapy session, or 'bring in your spouse for free' session, or whatever. Everyone loves a bargain, but lots more like the excitement of chance. That's the attraction of a casino, where you will most probably spend a lot, and lose a lot, but there's a slim chance you will win, and that's what keeps you going.
Therapy is healthier, and now it can have the allure of a winning chance at a free session, or half off, or a two tickets somewhere. You can have a drawing once a week or once a month, depending upon how much the prize is worth.
Dr Hoover, btw, took his entire staff of 8 people to Hawaii last year. My family's cleanings helped pay for that, but it was worth it, to have bright smiles. People keep on going to him, though he is not the only dentist in town, that's for sure.

Lotto Love = Lot O' Love

Love that photo of those folks, probably in the 1980's looking over cotton bargains, right on the sidewalk!
Those eyeglasses are a dead giveaway!

Who would have thought that cotton prices would increase by almost 1000% in just a couple of years?
You can blame a drought in China and their demand of American cloth, as well as the decision of many cotton farmers who've decided to use their land to grow grain, as there's been a drought in Russia and their demand for American grain.
http://www.investmentu.com/2010/August/cotton-price-increase.html

We will see more and more price increases and skyrocketing inflation beyond what most of us can imagine.
With so many items being made from crude oil, from plastic bags to polyester cloth to cosmetic ingredients to flavorings to asphalt roads, anytime oil producers claim that they have to raise the prices because of "tensions in the Middle East", they can get away with it, like they did a couple of years ago, when oil went up to $150 per barrel. Even water will go up, because so much from the Great Lakes is being shipped abroad, and southern aquafiers are being depleted by greedy companies that are pumping underground reservoirs dry.

What can we do? Buy good quality clothing that will last many years. Buy locally produced food that wasn't shipped thousands of miles. Learn canning techniques and do it when surplus foods are cheap. If you can, move to the country near a major city, and get some farm stock like chickens and goats. Five acres well planted/planned can sustain a family of six people. The government isn't really there to help the middle class, while the lower-middle class grows ever larger. We'd better get used to supplying ourselves with commodities that pretty soon will be priced beyond our budgets. Carpool, learn new skills, prepare for the worst, and hope for the best. Buy bargains when you see them, but only if you really need them. Don't skimp on your health because you'll surely need it when the times get tough and you need to be resourceful. Think Amish! Go solar! Join a food co-op! Depend less on bigPharma, bigAgra, big Oil, and you will certainly come out ahead.

And don't forget your monthly visit to your Physical Therapist -- she may accept real food as partial payment!

Right, and how can you do a good job seeing 30 people a day for a buck each? Thanks for your meaningful comments. I really appreciate them.

Linda (and everyone else): No one can do even a half-***ed job - in any type of therapy, seeing thirty people a day for a buck each - no therapist can live (let alone grow/sustain a practice) on $30/day - at least not here in the USA. However, I do slightly disagree on the NEVER DISCOUNT (never and always are dangerous words!) theory. As illustrated in the previous comments, there are ways to help some of the people, some of the time, for less than your standard fee, without de-valueing your service. Personally, I like the "new clients only, one-time % off, expires by ?" coupons. And yes, you can use a service; or you print up your own - depending on the target audience. Dr. Drea is right about the fact that truly well-satisfied consumers of your service will keep coming back repeatedly anyway - and if you make it clear that you are not "discounting", but actually marketing for new clients (like in above-said coupon) then your "regulars" will understand. Heck, I want my therapists to have healthy, thriving practices - so that I have the assurance that they will be "in business" ("practicing", if you prefer) when I need them for myself. So if they offer their services - once - to attract new business for less than I have to pay - well, it only makes sense to me.

I'm getting some great ideas from this site. Thanks everyone!

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