The Danger of Discounting Your Time
Discounting physical products is a math equation; discounting a service is a slippery slope that devalues your expertise. Agencies, consultants, contractors, and freelancers use our Service Industry Discount Calculator to visualize exactly how much extra time they have to work to make up for a 15% discount.
The Hourly Rate Trap
If your target margin on a service is $50 an hour, and you offer a 20% discount on a project, your margin just dropped to $40 an hour. To make the original amount of profit, you either have to find more clients or work 20% more hours in the same week. Before discounting your time, evaluate your true labor costs with the Employee Cost Calculator.
Strategic Introductory Offers
The only time a service discount makes sense is as a 'Loss Leader' to acquire a recurring client. For example, a cleaning company might offer 50% off the first deep clean to secure a 12-month weekly cleaning contract. You trade upfront margin for long-term Lifetime Value (LTV).
Frequently Asked Questions (FAQ)
Generally, no. When you discount a physical product, you are discounting a commodity. When you discount a service, you are discounting your time and expertise, which devalues your brand.
Value-adds. If you are a landscaper, don't offer 20% off the lawn care. Instead, offer a free gutter cleaning with a full-price lawn care package. It takes less time and costs less money than a 20% cash discount.