I recently was lucky enough to do a seminar in Cairns where I was asked a very thought provoking question; “How much is an acceptable amount to discount products and services to get them moving?” Anyone who has ever met me will know that my response was both immediate and straight to the point. My answer was simply - “DON’T!”

In all my years as a consultant I have very rarely recommended discounting as a marketing tool. There are several reasons for this that are worth exploring as I firmly believe that it gives the wrong impression of your business to your clients. Unless you want an image of being cheap, discounting is to be avoided at all costs.

• Discounting is literally taking a loss in your profit margin.
• It often attracts bargain hunters who are not the calibre of client you want as your core business.
• It gives the wrong impression that there was lots of margin in the original price.
• It gives an incorrect impression of the value of your services in general.
• Customers will come to expect a discount on all sorts of other items once you start offering it in one area.
• There are better options available to you.

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Let’s explore a scenario I saw in a salon just the other day.
The owner told me that the salon was doing it a bit tough lately and so, in an effort to attract a few extra facial clients, they were advertising anti-ageing facials 25% off their normal prices. Now at first glance this sounds, like a pretty good deal and may sound familiar to many salon owners across the country, as I have seen similar advertisements everywhere I travel. Admittedly it did attract a few extra clients…but at what price?

The facial being advertised was normally valued at $80.
25% discount is a saving to the customer of $20
It represents a loss in profit to the owner of $20
The client now only expects to have to pay $60 for a facial in this salon
The client is only receiving what they would normally receive just at a lesser price
Despite the lower price it costs the same in wages and product to do the treatment

However, a great alternative to discounting is to value add. What if the salon owner had offered this instead?

A Superb Turn Back Time Anti-Ageing & Super Hydrating Facial

You Receive:

• A full diagnostic skin analysis and comprehensive home care report: FREE
• A stress releasing scalp massage: FREE
• A sensational neck, shoulder and décolletage massage: FREE
• An anti-ageing facial treatment with vitamin serum infusion and ultra hydrating masque application: $80

THEN

• An eye enhancing lash tint: FREE

AND

• A skin smoothing hand exfoliation and paraffin treatment: FREE

THAT’S OVER $150 VALUE FOR JUST $80
This special is sure to book out quickly so call the salon TODAY to reserve your appointment time.

Now in the case of the value added facial we have a completely different approach. For starters the salon isn’t discounting its core treatment - the facial. It is normally valued at $80. It is worth $80 and is good value at that price. Instead of lowering its value we have merely added extras to enhance its appeal. First we called it a name that doesn’t appear on our price menu so that it cannot be directly compared. We listed off all the things we should be doing but usually probably give-away.

A thorough skin analysis should have a cost of $30 as it is your expertise and knowledge that is being sought after, but it actually costs you nothing to do. The neck, shoulder décolletage and scalp massages all should have a value of $20 but again cost you virtually nothing bar a drop or two of oil. The facial is your normal anti-ageing facial treatment with a serum and masque. The lash tint costs less than 50 cents in product and can be done whilst the masque is on so it costs nothing in wages. The hand exfoliation and paraffin masque might cost a dollar and can be done also whilst the masque is on and the tint is working. So again, no cost in wages. Yet if you add up the value of all these treatments they come to over $150.

There is no perceived discount on this special offer. I have instead just been incredibly generous.
The client receives $70 in extras
I lose $1.50 in additional product and no extra cost in wages
The client is exposed to two additional treatments in the hand treatment and lash tint that they may actually enjoy and want again even when it is no longer on special.
The offer doesn’t cheapen the image of the salon

In short, the client is $50 better off than the discounted offer, I am $18.50 better off, I have exposed the client to new services, and it looks a far more attractive offer.
The best result is what happens when the offer ends and the price returns to its normal $80. After discounting clients will be upset because just a week ago that same treatment was $20 less and they know you weren’t losing money then, so now you must be really ripping them off! They might not physically say this but you can bet that’s what they are thinking.

After the limited time only, value added special finishes everything goes back to normal. You were being generous for a short time - that’s all. So it is not perceived as a rip off because the facial itself is still its normal price.

Time and time again the value added special out performs the discount anyway. It’s all about perception. The client correctly believes they are getting more for their money. The trick for the salon owner is to utilise services that can be done whilst the masque is on (so wages are of no concern) and choose services that have a high perceived value but a low actual cost.

In my own salon we don’t value add a brow shape because it is difficult to do whilst the masque is on and so will add 10 minutes extra to the treatment costing additional wages. We do offer LED Light Therapy, foot massages, fingernail tidy and paint, specialised neck and decolletage masques, eye treatments and hand massages as extras because they have low actual costs but a high perceived value to the customer. For example a lash tint is valued at about $20. Yet it costs as little as 50 cents to apply.

That is not to say that I never discount. There are a few times when this sort of activity is worthwhile. If a salon is moving out of a particular product range then discounting the last few items of stock that just hangs around is a worthwhile exercise. If you calculate what your cost was, then you can discount down to that point. Basically you just want to get rid of an item and will not be stocking it again so it doesn’t matter.

Even before considering discounting product, look to packaging it up with extra samples and a $3 loofah glove, or offer the product with a service such as a lash tint or half hour upper body massage. This way the client gets to try something they may never have had (there’s always the possibility that they enjoy it and rebook) and the service cost little more than wages.

In the end, the value added option doesn’t devalue the perception your clients hold of the quality of your business. Continued discounting cheapens this perception and before long clients will actually ask for a discounted price!