Here's how to profit more from discounts

What I believe: “Staying in business” means that you care more about long-term credibility than immediate profitability.

One thing the people I work with often find hard is dealing with customers who ask for discounts.

It’s important to know how to offer discounts, because giving everyone who asks straight away (1) eats at your profit and (2) tells them that your initial pricing was only made up (it actually is, but it should be a shared secret between us, lol).

There are three ways I’ve learnt to do this:

1. Discount by feature

This is when you offer a discount in exchange for removing something from your original offer.

Ex: If you sell tutoring, when someone asks for a discount, ask to remove a feature of your original offer. It could be having only 3 sessions weekly instead of 4, or removing daily accountability. What this does psychologically, even if they don’t take it, is establish that your pricing is coherent with the value you’re providing, since you reduced the price when you reduced the value.

2. Discount by referral

When they ask for a discount, ask them for a referral in exchange and make it the condition for earning it. Referrals work best when they’re two-sided (I’ll explain in my next post). This is profitable because it’s you acquiring another customer at no extra cost. The CAC (customer acquisition cost) for the referee is effectively covered by the referrer’s discount.

3. Discount by review

I like this a lot. Most people don’t normally like to do video reviews for businesses (and that’s one of the most authentic kinds of proof a business can have). So, asking to discount your price in exchange for a particular type (or types) of review actually works really well.

P.S. I’m launching what I promised tutors and creators soon. I hope it is very useful for you.