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The Secret Side of Discounts

In 1875, a spectacled man named John Wanamaker bought an abandoned railroad freight depot and turned it into America’s first grand, dazzling department store.

Like any big retailer, he had to hire more store clerks around Christmastime every year to accommodate the swell of holiday shoppers.  However, all the extra help became unnecessary in January when sales died back down, and so he had to cut his workforce every year right in the dead of winter.  John was a decent guy, and he hated doing this, but the low January revenue simply could not support that number of employees.

So one year he decided to try something new:  He purchased bed linens in bulk and sold them just above wholesale price – the first ever January “white sale.”  People came in droves to snatch up the great bargain, and this blockbuster sale made him so much money that he didn’t need to lay anyone off.  His profits skyrocketed during a traditionally slow season, not only because of the volume of sheets he sold, but because people coming in to buy sheets also bought other things they saw while they were there.  Win-win for Wanamaker!

We can learn something from John.  Namely:

Discounts aren’t about letting customers save money for the heck of it. Discounts serve one clear purpose:  Making money. 

Sure, there are times when discounts are totally appropriate for humanitarian and kind purposes – I’ve seen pet photographers give discounts to people who adopt from humane societies, family photographers give discounts to military servicemen, and so on.  I stand behind you 100%.  I’m all about finding ways to use our skills and businesses to make the world brighter.

But in order to be around to do that kind of humanitarian work, you have to stay in business.  Sure, John could have just let the clerks keep their jobs because he didn’t want to pull the financial rug out from under his workers midwinter.  But he was a businessman, and if he didn’t take care of business first, no one would have a job.  So instead of thinking “oh, I’ll just let them keep their jobs,” he thought “okay, how can I make as much money as possible so that they can keep their jobs without hurting the company?”

We’re photographers.  We like to help people too.  We want clients to be able to afford our services. 

So when someone comes to you and says your services are out of their budget, it is sooooo tempting to just hand them a discount so that you can be nice to them and least earn *something.*  I know, I’ve been there.  But this kind of discounting is different from what John did.  His discounts brought in the money.  Your discounts, when given randomly at clients’ demands, can put you out of business.

Yes, advertised discounts can bring clients in the door.

But here’s the thing:

Unless you are a big store, using big-store discount tactics can hurt your business.

John was selling tons of sheets, so he could afford to only make a small profit on each one.  We’re not like our friend John.  Our services represent a substantial investment of time, and we can’t buy and sell the hours of our days in bulk.  Each hour has to count.  Unless there is a way to cut 30% off the amount of time you spend on each session, slashing your prices by 30% is only setting you up for exhaustion and overwork.

Additionally, if I’m a grocery store and it’s Valentine’s Day, I can buy a bajillion red roses and sell them for $9.99 a dozen.  I’ll do this because I know that most people will also buy milk and laundry detergent at full price on their way out.  The money is being made up elsewhere.

I’m guessing you’re not planning on selling milk and laundry detergent along with photography anytime soon.  So as small businesses, before we slash our prices to get people in the door, it’s imperative that we stop and think:

Am I making the money up elsewhere?

If it’s the slow season and you cut your session fee in half, maybe you’ll be able to put together an enticing canvas wrap package that will make up for the money you lost on the session fee.  Or maybe you spontaneously bring in a well-connected person for a free session because you know they’re going to send all their friends your way, scoring you clients who never otherwise would have seen your work.  Cool.

But when you’re a service provider offering a relatively narrow scope of services and products, cutting prices for the sake of cutting prices can damage your business long term.

Just like the white sale taught people to wait to buy sheets in January, regular discounts on your services will teach clients to wait for discounts.

People don’t need photos done every month, just like they don’t need to buy sheets every month.  If they know you slash your session fee every fall to make up for slumping business, you can bet your britches they’ll wait until fall.  For non-urgent expenses, people can and will watch like hawks for savings.

Discounts can also make your life harder between sales.  It devalues your services and changes people’s price anchors for how much your service ‘should’ cost.  If a haggler knows that you just gave the exact same photoshoot to someone last week for half the price, he or she will only be emboldened to demand that same service for less than full price.

If you feel you absolutely must alter prices to get people in the door, consider these two alternatives to discounts:

  • Instead of ‘discounts’, create an entirely new “product” that is sold for a reasonable price.  Make sure that product does not replace your regular services.  Mini sessions are one example – people can get a springtime picture of their child playing with bunnies on a farm for a lower price than a full family session.  However, this does not replace a full family session – if mom wants pictures with her kids, she needs to hire you for a full session.  Creating ‘products’ like this on an infrequent basis also lets people sample your work in a low-risk situation, so that they may be more likely to come back and book a full session. You might consider making the mini sessions unpredictable so that people can’t simply wait for them on schedule – if you did an Easter mini one year, consider doing Mother’s Day next.  If minis are a huge part of your regular offerings, then this strategy may not be for you.  I’m speaking to those who want to get people in the door with a mini, but don’t necessarily want to do them often.
  • Give them a deal if they buy in bulk.  For a limited time only, if they spend more than {your sales goal}, they get __% off additional purchases, not a dime before.  People will spend money to save money.  Sales increase.  Woo-hoo!

Whatever you do with discounts, be

1) crystal clear with yourself about how it is going to boost your business.  Is it a strategic move, or are you caving to pressure?  And

2) proceed with caution so you don’t teach people that you are worth less than full price.

Take care of your business so you can take care of people. :-)

 

Melanie Hood - This is good good good stuff. Thanks.

Jenika - Thanks Melanie! :-)

Jennifer - So much good to think about, thanks for that!!
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Jenika - My pleasure Jennifer! :-)

Melinda - Good insights!!! Totally thought of you during the Sandy Puc workshop…did you jump up and down when she stated that photography was 80% psychology and 20% photography??? Or was it the other way around..haha…I can’t find my notes!! Either way, I thought of you :)
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Jenika - I was absolutely high-fiving the computer screen :-) Thanks for thinking of me. It was a great creativeLIVE!!

Mike - Thank you! I just found your site through Digital Photography Tips. Looking forward to reading more of your posts.

Jenika - Thanks Mike! :-) Glad you’re here.

Joni Bilderback - So what would you say for wedding photographers?? how can I get more bookings and money flow with discounts –I can’t even think of a discount that would function without hurting me :( I always find all these great resources and they never mention how to apply to wedding photography

Jenika - I’m not a wedding photographer, but if I were, I’d never use discounts to get clients in the door. If people weren’t wanting to pay my prices, I’d find a different group to market to. As a portrait photographer, I face a different challenge because people generally do not prioritize having portraits done. It’s a huge battle to get people to realize – this is your life, you need to take time to document the everyday and not just the milestones, and please allocate the money to get someone whose work makes your heart flutter. I believe in full price, but what I’m advocating here is actually *not* to discount, and if someone feels they have to do something, then try one of the non-discount repricing methods. :-) But a wedding is a once-in-a-lifetime experience. It’s not as though you can say “hey wedding photography 50% off!” and people will decide to get married just because you are having a sale. ;-) If they’re shopping for wedding photographers, they’ve already made a decision to hire a wedding photographer. You don’t have to convince them to hire a photographer – you have to convince them to hire YOU. You have to distinguish yourself by showing value, creating connection, and giving them a strong style they can’t get elsewhere. You can also build relationships with other business owners to recommend you to others (I’m teaching a webinar course about exactly that in a couple weeks).
I’m not a wedding photographer, so it’s natural for me not to use wedding examples because I don’t have firsthand experience, not because I’m selectively ignoring you all ;-) But I think you’ll find a lot on this blog that is applicable to weddings.

Unkle Buck - If you get the first gig (the wedding), who would not want a follow-up shoot (a quick, short one where you can still make money) on their first anniversary, fifth, tenth, etc. Once you dazzle them with your work on the wedding, make it easy to repeat business in the future.

Susan - Do you have a post on gift certificates donated to charity? I’m trying to put one together and I am a little stumped. Do I just put a value amount, say $150 and its good for either the session fee or prints? My session fee is $100, so in this case I would be giving away a session and $50 worth of prints. I have to put this together by Thursday night so I would love your input, whether it be on this comment or a full blog post or a link to a previous one. Thanks so much. I love love love your site (being a psychology major myself-ages ago!)
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Jenika - Hey Susan – I haven’t posted about that yet. (In the future you can always use the search bar at the top to check.) If it were me, I would donate a session for sure, and then it would depend on how much I wanted to invest in the hard cost of producing a print. You don’t have much cost of goods to do a session (mostly time and gas to/from, plus time editing) but prints involve an actual monetary cost. If your profit margin on each print is low, you could end up having to spend a lot of money out of your pocket. For example, if you just say $150 good for whatever they want, and they use it to buy a canvas, then you might have to shell out $60+ to get the canvas for them, depending on how much you mark up your canvases. So don’t shoot yourself in the foot. How much you give them in print credit should be directly related to how much you’re willing to shell out for the prints.
Whatever you do, be sure to Google the rules for what you say on gift cards so you don’t end up in any kind of trouble. Be sure to specify that the card is not redeemable for cash / no cash value (or the person can come to you and demand $150), an expiration date, where the card is good (so you don’t end up driving 100 miles), etc.

Susan - oh good points. So what if I said $100 good towards prints. meaning if my gift prints are $40 each and they wanted 3 8×10′s then $20 would be out of pocket for them. My out of pocket for two of the prints would be minimal.
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Jenika - It’s up to you. What you described is a good strategy to get them to spend a little money with you (they’ll spend money to “save” the extra $20). It depends on how you feel about the exchange – if it’s a high-end client that’s likely to get the gift, then cool. But you of course don’t want anyone to feel like you set them up to spend money. The lower budget the client is likely to have, the more likely they are to complain of something like that. So use your judgment. You could just say “$150 good toward a session and/or gift prints”. Good luck!

Jocelyn - As usual, a GREAT post Jenika! It was very timely for me because I’ve been contemplating offering a ‘promotion’ (read discount) for the spring. Something has been holding me back though…your post confirmed my subconscious suspicions.

Just to let you know, I discovered your site a few weeks ago and I am learning SO much about the business side of photography. Thanks for the time you devote to it!

Jocelyn

Susan - I decided to gift the session and include a $40 print credit which gives them an 8×10, 5×7 or 16 wallets. If they want to buy something else they can. But they don’t have to. And they shouldn’t feel ripped off. I will likely not edit as many photos though. THanks for your help. I appreciate it.
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Jenika - Sounds like a great plan! :-) Glad to help. And glad you’re supporting a good cause.

Jenika - Thanks Jocelyn! :-) I hope it helps. You can do it!

Rayleigh Leavitt - This is a really good article! I’ve been working on this myself. I tend to give people discounts just because they say they have a hard time affording me. But my business isn’t getting anywhere that way. So now I’m trying to stick to my prices and allow my possible clients to either find a way to pay for it, like they do with anything else they want badly enough, or to take time and save up for it. Because my sessions have a lot of value and my prices are set accordingly. They are worth saving up for.

Jenika - Your services ARE absolutely are worth saving up for Rayleigh! I’m so glad you said that – we have to believe it about ourselves before anyone else will. Keep shining! :-)

Rayleigh Leavitt - I have a question that I’d love a reply to! I have my pricing set so that I have a sitting fee and then products are purchased additionally. And I set my prices so that if I were to get little or none of the sitting fee, I’d be happy with what I earned just with the products. I did this so that I could freely discount my sitting fee without feeling like I was losing money or not earning what my photography is worth. And my clients feel like they got a good deal by getting a discount. Do you think this is a good system? Or do I still look like I’m devaluing my work by offering discounts so freely? Thanks!

Jenika - If you have a strong sales process and this method resonates with your target client, then it sounds fine to me! I’d encourage people away from doing “free” sessions because otherwise you could end up with a lot of no-shows, I want people to feel committed to showing up on time and not rescheduling. Make it clear that the fee is a retainer. If you find you’re attracting people outside your target client base due to the session fee amount, or that their expectations for spending with you are skewed because of the session fee amount, then it may be time to rethink. But again – if it’s working for you then that’s what matters most!

Ashley Manning - I loved this article! I do have a question, I have probably made a huge mess with everything, but when I started out I did lots of sessions for free and now my prices are very low. I don’t know how to go up on them. I work a full time job and I do photography on the side. I want to do it full time, but there is no way I can supplement my “full time” income with what I am charging. What should I do?

Jenika - Hi Ashley! What you described is pretty much how all of us start out, nothing unusual about it at all. When you reach a point where you are producing consistent results with each client and can offer a professional experience, raise your prices to a sustainable level. (I used Easy As Pie to guide me through this, I’m a huge fan, though there are some free pricing guides out there from Stacy Reeves or The Modern Tog to help you understand how profitable pricing works). Then it’s up to you to market yourself to a clientele that will pay those prices. If you’ve had low prices, the people who have been coming to you may not be able (or interested) to pay more, though you can write to them and explain that in order to be around long-term to serve them you have implemented your long term pricing, but you still value their business. Build relationships with other local businesses that serve your ideal clients, give clients a beautiful experience that they’ll want to tell others about. It’s all about relationships!! That’s the short answer anyway. I hope that helps.

Ashley Manning - You have helped me more than you could know, and I feel so much better knowing that I’m not the only one. Thank you so much!!

Jenika - That’s what I’m here for – so glad to help. :-)

Theresa - Outstanding presentation and explanations in this post.

I see where I need to adjust my thinking when it comes to striking a balance between customer service orientation (which comes naturally to me) and business-mindedness (something I really struggle with).

Thanks so much!

Nakesha - Ahhh I stumbled upon this blog post from the useless price post and these both are serious game changers!!

Jenika - I love game-changing stuff! :-D

Calvin Pennick JR - This i s an very good post. I am in the process of creating my session fees and I have been struggling with how to determine them. This post will help me going forward. Thanks

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