The Lowdown On Discount Services

Read Time: 6 Minutes
Expertise Area: All Career Fields
Career Stage: Recently Licensed & Seasoned Professionals

When you lower prices, you lower the perceived value of your services and skill. Any kind of pricing adjustments affects your business’ profitability so it’s important to make sure that whatever you are discounting makes sense for your business and your bottom line. This guide discusses when it is appropriate to reduce pricing, whether as part of a marketing strategy or an in-kind donation.

Not properly charging for services is a major issue within the beauty and wellness industry and many beauty professionals give discounts. It’s easy to do, as many beauty professionals view their clients as friends and services are often given at a discount as a courtesy. When offering discounts to clients (who are not family and friends) the concept is the same- offer a reduction in price to show appreciation for the client and boost repeat and referral business. Truthfully, though, discounting is not necessarily bad for business when done with intent and purpose.

Pros Of Discounting

Let’s start with the true definition of a discount. Discounts are a reduction in price and are used to entice a client to make a purchase. In the beauty and wellness business, discounts are often frowned upon because they can undervalue the important contributions beauty and wellness professionals make every day to the public at large.

With all that said, discounting can be in your best interest when used effectively and responsibly. discounting can be an excellent business builder. In terms of business of any kind, discounts are a useful and trusty source which can encourage repeat business, increase client satisfaction, and build significant value for your client, especially where retailing is not necessarily the primary reason for a client’s visit.

Smart Discounting

It would be ill-advised to offer random discounts on products and services for no reason, but it may be wise to consider the benefits of discounts in general, especially bundled discounts. A bundled discount means that a customer will get a certain percentage off a product or service when another requirement is met. For example, let's say your business offers an array of conditioners at $30 each. A bundled service might be offering customers $10 off the purchase of any conditioner with a specific, related service, like highlights. This has two benefits: it helps you educate your client on the benefits of using the product to maintain their hair between visits and brings in an additional $20.

Another example is if you have a combo business, like a salon and spa. Let’s imagine that your spa services at your salon have witnessed a significant drop in sales. For your salon, spa services are a major part of the client’s overall experience and are critical to the success of the business. Imagine the impact on your business if you were to offer a 25% discount on any spa service with the purchase of any salon service.

Bundling like this gives clients an opportunity to experience extra benefits (whether through a new service or a product that complements the service) and gives your business opportunities increase your average ticket price.

Groupon and other Discount Sites

There are many avenues for salons, spas, and shops to promote and drive new business. With more and more clients shopping online, companies like Groupon and LivingSocial target a wide network of people looking to get the best value for their money. However, just like any other marketing strategy, you must take into consideration the pros and cons for your business.

There’s no doubt these types of deals can drive more business to your salon/spa /shop, but at what price?

Pros of Working with Discount Sites

  • Brand Awareness The primary benefit of online shopping sites such as Groupon and/or LivingSocial is to increase your brand awareness. This form of marketing can provide mass exposure, perhaps to a target market that is not familiar with your business.
  • Great Way to Move Extra Inventory If you find your stock room full of extra inventory, this can be an effective way to sell through and get rid of extra inventory that’s taking up space and generate extra revenue.
  • Opportunity to Build New Customer Relationships Now that these new customers have come to your salon, spa, or shop, it is the perfect opportunity to turn them into repeat clients and create a mutual relationship with your new client. It’s your job to keep them coming back so make sure you have special loyalty cards or refer-a-friend deals ready to hand these customers before they leave.

Cons of Working with Discount Sites

  • Fees Typically, you will find these companies charge a marketing fee to place your ad and often you will be charged a percentage of the revenue you earn from the promotion.
  • An Influx of Traffic Offering discount deals can bring in more clients. This can cause scheduling conflicts and extra stress if your business isn’t equipped to handle a surge of new clients.
  • Lack of Brand Loyalty Plenty of people who take advantage of online discounts characteristically have no brand loyalty. These customers may be a one-time visit to your salon, spa, or shop.

There’s no doubt that developing an effective marketing campaign is critical to growing your business. Before you jump in and commit to incorporating online discount marketing companies, do your homework and read the fine print in the terms and conditions before making your final business decision.

How Often Should I Donate My Services?

It’s quite common for clients to ask their service provider to donate a service, gift basket, or a gift card to a local charity event they are supporting. Before you agree, make sure you think through how it might affect your bottom line.

One of the most popular reasons that business owners agree without doing the match is because of the “the feel-good factor.” It simply feels good giving back to the community. By giving back to charities and getting involved, you can forge a stronger connection within your community. It can also provide you with publicity, as many charities will promote your business on their website, provide event signage, and include you in all their write-ups. This is a powerful way to build your business and your brand awareness. But before you agree, you must take the time to establish a charity budget. Decide if this is a dollar amount you economically can manage donating per month or year. If you’re not certain how to calculate and set this budget, consult your accountant. At this time, also research what goods, services, or moneys donated are deductible.

Getting involved at any level in charitable work can be extremely rewarding and beneficial for everyone involved. Charitable giving is not only good for business, it can help improve workplace morale as each person on the team feels as though they are making a difference.

The purpose of discounting is not to rob you out of your business or undervalue your worth; its purpose is to entice the sales of products and services that may not have otherwise been sold. When you are strategic in your discounting practices, everyone wins.

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