Discount Sessions, Not Portraits!

Every business in the world has slow times that they want to fill to increase profits.  While there are many ways to accomplish this, most of us find that discounting our prices to be the most direct and effective.  The key to discounting is to offer a discount without adversely affecting your profit or the perceived value of your product in the mind’s of potential buyers.  When you are almost always having a sale,  the sale price becomes the value of what’s on sale.  I know a nice dress shirt at Macy’s has a value of $29 to $59 because every time I buy them they are on sale and although the retail price is $60 to $89, however with so many sales what schmuck pays full retail.  To avoid lower the perceived value simply don’t have sales all the time and have sales on different product lines to avoid this problem.

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The larger problem with discounting is the potential loss of profit and if you’re not careful the capping off or creating a lower maximum sale from those that take advantage of the sale.  To avoid both it is always best to discount sessions and leave portraits/portrait packages the same price.  You can offer a 50% off a session which is only a small amount of money to get new clients in and have the opportunity to sell them your regularly priced portraits.  This leaves you with only slightly less profit but no cap on the amount of the sale from each discounted session.

The problem with offering a discount on the portraits themselves is that the portrait sales are your profit center from the session and a discount amount that would actually be high enough to attract client will take a huge amount of your profit from the sale.  You could offer 70% off sessions and not have it cost you as much per client as 10% off the portrait order in the total final sale.  The difference is that people will notice 70% off something and call you, while advertising a discount of 10% isn’t going to be enticing enough to bring in any new business, although the client saving and your loss of profit would be greater.

While discounting portraits is never a good idea, the single biggest mistake I see in sales and discounts comes out this time of year, at Christmas.  Photographers not only discount portraits or their normal packages, they arrange smaller packages for Christmas and then discount those smaller portrait packages.  This not only takes a good portion of the profit out of the sale, it places a predetermined cap on each client’s spending.  When you give ball park pricing on portraits you give clients an idea of the cost and the client realizes it could be more, therefore when they go over the amount you gave them when you made the appointment they are not upset in most cases.  They realized they could end up spending more money.  When you create an “absolute” fix priced for a total package that a client can buy, you have established a budget in the mind’s of your clients and limited the additional sales you will have (on an average).

Clients might purchase additional products, but it severally limits the additional sales by establishing a set budget in the client‘s mind. If I call a studio that tells me packages start out at $399 and the average order is approx. $500 (I just picked these number they have no significance) this studio has given me a range of pricing so it hasn’t established a real budget in my mind.  If I were in this situation I would tell my wife, “Ok, you can spend a $1000 and no more!”  Then she would come home spending $3000, but before she told me how much see spent, she would explain how much she saved and/or received by buying what she did!”  This brings up another important point of large sales which is incentives.  Women always spend more money then their husband’s want them to.  To justify what they spend, the talk about what they received as a bonus for spending what they did or how much they saved by spending so much.  High end businesses realize this and give incentives to keep their female shoppers out of trouble and to keep them from canceling orders!  STUDIO LIGHTING DVD Order NOW!

In this same situation, if a studio had a package I saw advertised for $199 complete, they have just set my budget at $199.  Now I realize that my wife will over spend, so I tell her she can only spend $300 and she will spend more of course, but now $600 is a scary amount for her to spend, so in reality you have just lower your potential sale by a huge amount. Never put cap’s on spending and never discount portraits.  If  you feel you have to, discount additional portraits to add to the size of the order.  Buy one, get one 50% off or whatever is right for your business/clients.

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~ by jeffsmithbooks on October 29, 2010.

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