Discount or Value Add?

A colleague recently asked me for some advice. The projects she was working on were all finishing up, and with no new sales, there was obvious concern that she’d have no work in a matter of weeks. Her question to me was how much should she discount those proposals she had out there with prospects, in order to encourage new work. My answer? Don’t! The way I look at it is that by reducing your estimation on a project, without removing features or work involved, gives the prospect a few messages:

You intentionally over quoted to begin with
Your time is less valuable than first thought
You’re desperate for work

Even if you are desperate for work, the air of desperation is never good for prospects to see. A far more enticing method to create a sense of urgency and close some of those deals would be to ‘value add’. That is, offer to include something for either discounted rates, or free. Ideally, it isn’t something that costs you much, and certainly isn’t just your hours. No matter what you offer, make sure it has a defined deadline, and not too far in advance: ideally, a week to 21 days – no longer than that. Here are a few suggestions you could use as incentives. Six or 12 months free hosting Sure, there’s a cost to you in buying hosting, however if you have a great deal, it’s likely not to be too much. You could always make this half price hosting for a year, to cover at least your hard costs. One year subscription to a business magazine This is a great incentive – if your client is a business, of course. Business owners always enjoy reading about what’s happening in the business world, and a 12 month subscription means they will remember you every month for a whole year! Buy them a great book The book should ideally be on topic: perhaps if you are building them a new website you could buy them a book like SitePoint’s own Online Marketing Inside Out

– a perfect read for new clients, or find a book about online business successes or the like. A book about how to build your own website isn’t going to be a smart move, though! By doing the incentives this way, you’re creating a sense of urgency but you aren’t discounting your own rates. You could wrap this offer up in an email along the lines of “I’ve ended up with a few free subscriptions, so I’m offering one to each new client before the end of the month”. This also helps dispel any sense of desperation. Good luck, and let me know how it goes!

Frequently Asked Questions (FAQs) about Discount or Value Add

What is the difference between a discount and a value add?

A discount is a reduction in the original price of a product or service, often used as a promotional strategy to increase sales. On the other hand, a value add refers to an extra feature or service added to the original product or service, which enhances its value without necessarily reducing the price. The main difference lies in the approach: while discounts focus on reducing cost, value adds focus on increasing value.

How can value add benefit my business?

Value add can significantly benefit your business by differentiating your products or services from competitors, enhancing customer satisfaction, and fostering customer loyalty. By offering additional value, you can attract new customers and retain existing ones, thereby increasing your market share and profitability.

Can value add and discount strategies be used together?

Yes, value add and discount strategies can be used together. For instance, a business can offer a discount on a product and also provide additional services like free delivery or extended warranty. This combination can be a powerful tool to attract and retain customers, as it offers both cost savings and added value.

What are some examples of value add strategies?

Examples of value add strategies include offering free shipping, providing excellent customer service, offering extended warranties, providing free installation or setup, and offering loyalty programs. These strategies can enhance the perceived value of your product or service, thereby attracting and retaining customers.

How can I quantify the benefits of value add?

Quantifying the benefits of value add can be challenging, but it’s possible. You can measure customer satisfaction through surveys or feedback, track customer retention rates, and monitor sales trends. If your value add strategies are effective, you should see an increase in these metrics.

What is the impact of value add on pricing?

Value add can potentially allow you to maintain or even increase your pricing, as customers are often willing to pay more for products or services that offer additional value. However, it’s important to ensure that the added value is perceived as worth the extra cost by your customers.

How can I effectively communicate the value add to my customers?

Effective communication is key to ensuring that your customers understand and appreciate the added value. This can be achieved through clear and concise marketing messages, demonstrations, and customer testimonials.

What are some potential challenges with implementing a value add strategy?

Some potential challenges include the cost of providing the added value, ensuring that the added value is perceived as worth the extra cost by customers, and differentiating your value add from those of competitors.

How can I overcome these challenges?

To overcome these challenges, it’s important to carefully plan and implement your value add strategy. This includes conducting market research to understand what your customers value, setting a realistic budget, and continuously monitoring and adjusting your strategy based on feedback and results.

Can value add strategies be used in all industries?

Yes, value add strategies can be used in virtually all industries. The specific strategies may vary depending on the industry and the specific needs and preferences of the customers.