Most of the marketing books I have read over the years have discouraged discounting because of two fundamental reasons:
1. You train your customers to always buy your product/service at the discounted price so that they will wait to buy until they can take advantage of the next discount.
2. You are tacitly saying to your customers that your product isn't valuable enough to buy at the discounted price. Those are certainly two valid arguments, but as an entrepreneur, you tend to learn things in running a business that most marketing "experts" never encounter. And the events industry is unique in the mix of services and products we offer; the diverse customer bases we serve; and the seasonal cycles we experience every year. I used to be strictly in the "no discounts ever" camp, but in the middle of 2014 we experimented with offering discounts for our online event management software during the 30-day free trial period, and it worked so well that we have continued this practice. So I have to admit that I am now in the camp of "offer discounts when it makes sense." So here are some scenarios when it may or may not be advisable to discount your event venue, catering or event planning services. One word of caution, though ... discounting is like a drug. Once you start, it's hard to stop. Your customers WILL expect to pay the discounted price moving forward, and it will causes friction if you try and raise prices on them.
DO consider discounts when you are trying to build a customer base.
It's hard to start a business, and even harder to build a client base from nothing, especially in an industry like hospitality, catering or event planning where there are so many competitors. As such, offering discounts and perks when you are just starting out can help you land clients that are a bit more price-sensitive and establish some operating revenue while you get scaled up. This is why we have been discounting our online event software this year, and it has provided us with a solid base of great customers and revenues that are sustaining us through our first few years.
DO NOT offer discounts in perpetuity.
Discounts are great for certain purposes for a defined time period (like in Scenario #1). But offering never-ending discounts just really means that your retail pricing is too high and that your customers don't believe the services you offer are worth full price. You would just be better off either lowering your prices or keeping your prices higher, removing the discount and emphasizing the value that your customers receive when they use your event services. Demonstrating value can be more difficult for service-bases businesses, but you can to this with lots of customer testimonials, polished marketing materials (especially your Web site and promotional videos) and making a great first impression.
Now you have a chance to be more productive with a set of 26+ easy-to-use event management and venue management software tools at your fingertips ... at a discounted price! Just sign up for a 30-day free trial of Planning Pod, and sometime during the trial you will receive a mystery offer from us. Discover how you can save tons of time (and a few dollars a month) with our tools built for event professionals ... create your free trial today.
DO consider discounts during slow seasons.
Slow event seasons are slow for a reason ... people simply don't book certain events certain times of year. Fewer brides and grooms book weddings in the winter. Fewer trade shows and fundraisers happen during the summertime and fall. However, if you give someone a very good reason to book their wedding in November or their meeting in the fall, they may reconsider their thinking. Providing such prospects with discounted pricing for booking your event services during off-times or off-season can provide some much needed revenues during those slow times when you weren't expecting much income, and it gives clients more options. Many event venues offer these discounts to keep their venue booked, and it works very well for many of them.
DO NOT offer discounts selectively.
If you are offering a discount for a certain time period or purpose, make sure that you treat all customers the same. For example, if you are offering a limited-time discount to new customers, don't offer it to some customers and not to others, because this is unfair and people will eventually find out about it. I had a friend who worked for a company that was providing such a discount, and along came a fairly flush customer who they knew could afford full pricing. So they didn't offer the customer the discount, and a few months later during the final preparations for the event, the customer found out that other customers received discounted pricing and she has never ceased badmouthing my friend's company around town. Whether you run an event planning, event venue or catering business ... whether your clientele is local, regional or national ...
people will find out, either via word of mouth or social media, so just treat everyone the same regarding discounts.
DO consider discounts when you are testing out new offerings.
Sometimes if you have a new product or service you are rolling out, you may have a vague idea of what the pricing for the new product might be but aren't exactly sure. So a good idea is to establish what you think is an appropriate full price for the long term but offer a discount in the short term to get people into the product and establish a track record with the product. An added bonus of discounting a new product/service offering is that you can start to gauge if people would pay the full price or if they wouldn't buy the service if they had to pay full price, and you can adjust your full pricing accordingly.
DO NOT offer discounts to cover up deficiencies.
If you go to a store an buy a new television on sale, you don't expect it to work 75% of the time or you don't expect half the features to malfunction. If you buy a loaf of bread on sale, you don't expect half of it to be stale and moldy. You still want an intact, fully functioning product for the money you spent on it. The same goes for discounting event services. Your customers may realize they paid less than full retail, but that doesn't mean they expect anything less than your best service and effort. If you have any deficiencies in your business, you need to fix those first and ignore discounting until you are able to provide your customers with the experience and value they expect. This brings up an interesting angle on discounting your pricing when recovering from a bout of bad publicity. A batch of bad potato salad can ruin a caterer, and poor upkeep and uncleanliness have sullied the reputation of more than one event venue. So if you have an event business that has fixed troublesome issues and is trying to rebuild its reputation, discounting can be a good strategy to woo customers back and to prove to the marketplace that you have righted the ship.
DO consider discounts for special occasions.
Do you know how Corona now owns Cinco De Mayo? Or how Macy's owns Thanksgiving? Well, you can also pick a day out of the year and offer a discount to your prospects and customers to enhance your top-of-mind awareness. For example, many businesses offer discounts on their anniversary. But a better idea is to pick an occasion that people are already familiar with, like Groundhog Day, and every year promote an offer, maybe something like this:
"Spring is right around the corner, and now is the time to start planning those spring and summer events. To commemorate the arrival of spring, this Groundhog Day, if Punxsutawney Phil sees his shadow, you only get 5% off all event planning services. If he doesn't, you get 10% because spring is coming early!" Basically, have fun with it and be consistent with it every year, and you will "own" the day in your market and have a great way for people to remember you.