COMMON MISTAKES: RELYING ON DISCOUNTS
June 2, 2011
I love a good sale as much as the next person. In fact, I usually wait until the end of the season to buy my favorite designers. And now, with the economy being what it is, I’m seeing more and more businesses in the wedding and event industry also offering steep discounts. But are discounts really good for our businesses? Let’s break it down:
1. You keep working!
2. As long as you’re working, you’re learning.
3. You meet new clients and vendors, and your network of contacts grows.
1. If you’re offering a drastic discount, you’re most likely not making a large enough profit.
2. You’re getting work, but you’re making everyone else in the business look like they’re overcharging. In reality, they’re charging what they should be charging; you’re the one who is undercharging. But clients don’t know that.
3. You run the risk of being associated exclusively with bargains. That’s a hard reputation to distance yourself from. It may follow you for decades.
I’ve been accused of being too expensive. But I have never overcharged clients. My prices are based on a very specific set of criteria:
1. The time that I invest in the project, which is my hourly rate.
2. The cost of the materials, such as flowers, lighting, food, etc.
3. My overhead, including rent and bills like electricity and insurance.
4. My designs, and yes, folks, these aren’t free.
5. Travel time and transportation.
6. The breakdown and the length of time the breakdown takes.
7. And last, but certainly not least, TAXES.
If you can offer a discount and still manage to take care of all of these things AND make a 50% profit then that’s great. However, it has been my experience that any time I give someone a discount, I lose money. If you want your business to be a long career, be very careful about developing any sort of discount policy. In the short term, it might get you a few more jobs, but at what cost in the long term?