Are Discounts Killing Your Profits?

Are you frustrated with your existing customers expecting more but are not willing to pay for your service? Then you cannot miss this week’s training video, where I talk all things discounts, and more!

Let’s begin by rewinding and looking at how you have trained your customers to think about the brand of your studio. In short, it is key to build a brand that rewards customers for paying full-price for your service and you must show your value to your customer by educating them.

Offering discounts on your service can be quite damaging to your brand. 

Discounts are a good strategy when you want a quick burst of sales but offering discounts too often, and without being prompted by your customer, it may show a lack of confidence in what you are selling.

By offering discounts throughout the year, you will also begin to lower the quality of service you offer.

This could mean you need to employ cheaper staff, reduce the level of customer service you provide, or not be able to offer state-of-the-art facilities and opportunities to your students.

You must know your bottom line in order to charge appropriately for your service. If you switch focus to your profit and loss rather than student numbers, you will be able to see that by not discounting your rates, you can take on fewer students. Not only will you be having to serve less customers, your ideal customers will benefit as well from the additional attention.

Working smarter, not harder is the ultimate goal.

Stop working 80 hour weeks for discounted rates, but rather work for the same income while spending less time at the studio.

Try giving customers the same sense of urgency to enroll in your classes without the need to discount each time.Remind your existing customers why your product is still valuable at a higher price. Focusing on your value should always be your priority. Let your customers (new and existing) know how your service adds value to them as the customer.

Alternatives to discounting

• When customers sign up to a subscription with you, they are rewarded. The true value of your product can be seen in your casual class pricing (example: $25 per class) but when they sign a 12 month contract, this price is lowered to $22 per lesson because your administration costs are considerably lower. Therefore, the customer will benefit from the subscription model.

• Instead of discounting your product, offer extras. This says to your customer that you have thought about a strategy behind your offer. This could be ‘Bring A Friend for Free’ or ‘Free dance bag with your enrolment’. Freebies won’t devalue your brand, they also don’t reward the habit of waiting for a discount on future purchases.
  
• Offering a free gift also aids at incentivising an up-sell. For example, if a student were to enrol in 3 classes per week, they could receive a free leotard for their upcoming examination. The more you buy, the more you will be rewarded.
  
• Product bundle. Instead of showing your pricing as a sliding “discount” scale, consider packaging your classes into a bundle that provides an incentive to spend more for a greater value.
  
• Let your customers know what you are about. When people feel connected to your studio brand they are more likely to be loyal. People want to find a tribe. They will purchase product from a company that ‘gets them’ and has a similar vision for their child. Know what makes your studio special.
  
• Offer a membership option. If they register as a VIP member, they gain access to information, limited edition merchandise, early recital tickets, surprise gifts and personalised thank you notes from you – the studio director. These VIP’s become your biggest cheerleaders, your ‘super fans’. They are happy to spend more money because the have something to look forward to, something to keep coming back for and don’t want to miss out.
  
• Giving back. Dance studios are a community-based business. The question then becomes “how often do you give back”? The majority of companies now have a social awareness. What will yours be? Do you have a studio angel program that assists with hardship grants or do you donate a voucher to the local school each year. Do you partner with a foster care or domestic violence organisation to offer children classes? Being present in your community brings your tribe closer – and what better way for a student to feel proud than to know you have donated a voucher to their school.

Discover more ways to profit and thrive in your studio by registering here for our FREE Studio Growth Masterclass!

See you there?