Should You Offer Discount? The Pros, Cons, and When to Go the Extra Mile
Let’s talk about something many of us in small business have probably faced: the subject of discount. Maybe you know it as ‘Preferred Customer Rates,’ ‘Courtesy Discount,’ ‘Friends and Family Discount,’or even the classic ‘mates rates’. Whatever you call it, the idea is the same –doing a little something extra for the people we care about by offering a special price.
It sounds like a win-win, right? After all, we’re in business not just to make money but to help out where we can. And who better to help than our own circle? But, as with many things in business, it’s not always that simple. While offering these discounts can build relationships and bring in more work, they can also blur lines, squeeze profit margins, and sometimes leave you wondering if you’re doing the right thing.
This post isn’t about telling you what you should or shouldn’t do, but rather to give you a balanced look at the pros and cons of offering these kinds of discounts. Whether you’re a business owner trying to figure out where to draw the line or a friend wondering if it’s okay to ask for a deal, there’s plenty to unpack. Let’s dive in and explore when offering friends and family discounts can work in your favour – and when it might be best to hold back.
Let’s start b y looking at the Pros and Cons
Pros of Offering Discount
A sale where neither of you are happy is not good business
Building Relationships: Providing friends and family with a special rate can strengthen personal bonds and foster goodwill, making people feel appreciated and supported.
Word of Mouth: Happy friends who receive a ‘Courtesy Discount’ are likely to spread the word about your business, leading to more referrals.
Loyalty Boost: Any friends aor acquaintance who benefit from a ‘Preferred Customer Rate’ may become repeat customers, consistently choosing your services over others.
Testing Ground: Offering a lower rate, can be a way to test new products or services and gather honest feedback without the pressure of full-paying customers.
Goodwill and Reciprocity: Extending a discount can create a sense of reciprocity, encouraging friends to support your business in other ways.
Cons of Offering Discount
Undermining Your Value: Regularly offering ‘mates rates’ or similar discounts can devalue your services, creating a perception that your work is worth less than the advertised price.
Profit Loss: Discounts obviously will directly reduce your profit margins, which can be detrimental for small businesses that need every sale to maintain financial health.
Blurred Boundaries: Offering ‘Courtesy Discounts’ can blur the lines between personal and professional relationships, leading to awkward expectations of ongoing deals.
Perception of Favoritism: Providing ‘Preferred Customer Rates’ to some people but not others can lead to perceptions of unfair treatment, damaging other business relationships.
Exploitation Risk: There’s a risk of some acquaintances expecting mates rates every time, which can strain relationships and reduce your revenue.
When Offering Some form of Discount is a Good Idea
Remember, it isn't a great deal unless both parties are happy
Special Occasions: Providing a discount for a friend’s special event, like a wedding or birthday, can be a thoughtful gesture without becoming a recurring expectation.
During Business Lulls: If business is slow, offering a ‘Preferred Customer Rate’ might help generate work and keep your skills in use.
Limited-Time Offers: THis one is a little different as it could be taken simply as a ‘sale’. The important thing is to communicate clearly that the discount is a one-time or limited-time ‘Courtesy Discount’ to manage expectations effectively.
For Feedback Purposes: If you’re launching something new, a ‘Friends and Family Discount’ can encourage early feedback without the pressure of a full-price commitment.
When You Should Avoid Offering a Discount
Don't sell yourself too cheaply without a good reason
High Demand Periods: During peak times, offering mates rates or courtesy discounts can mean losing out on full-paying customers, affecting your profits.
If It’s Becoming a Habit: If friends expect ongoing discounts, it’s important to reassess and establish clear boundaries around your pricing.
When Margins are Tight: Offering any type of reduced rate, whether it's a courtesy discount or friends and family rate, can harm your financial stability when margins are already thin.
When It Feels Obligatory: If you feel pressured to offer mates rates or any similar discount, it’s likely that it’s time to reconsider the practice.
Effective Steps For Managing Discounts
Set Clear Boundaries: Be transparent about when and how ‘Friends and Family Discounts’ are available, making it clear they are not standard practice.
Offer Alternatives: Instead of reducing prices, offer added value like an extra service or personalized touch that costs less but feels valuable.
Be Honest About Costs: Explain the costs of running your business, which can help friends understand why discounts can’t always be offered.
Create a Policy: A written policy of apllicable discount rates and how they might apply can help maintain consistency and prevent misunderstandings
Conclusion
Navigating the world of discounting – ‘mates rates’, ‘Friends and Family Discounts’– whatever you want to call it, can feel like a balancing act. We want to support the people we care about, but we also need to protect the value of our work.
One of the biggest mistakes I see, though, is the reluctance to do anything for free.
And while it’s important not to undervalue yourself, sometimes offering a little extra can be a powerful step forward.
Look for a win/win. Try to keep your customer happy without compromising your situation
Think about it – throwing in something small and unexpected can be a game changer. For example, in my own business, I often include a few basic services in the package, but for some clients, I might throw in an extra service that wasn’t advertised or expected. I only do this when I see a genuine need and know it will help them move forward, build trust, and ultimately bring more work my way. It’s not about giving away the house; it’s about recognising when a little goodwill can turn a one-time project into a long-term relationship.
Offering these unadvertised extras when you see a real benefit can set you apart and show your clients that you’re invested in their success. Whether it’s an additional consultation, a quick fix, or a small add-on that makes their life easier, these gestures can go a long way in building loyalty without the expectation of ongoing discounts. This should be an essential part of your business ethos but you need know what it involves before diving in!
So, as you consider how to handle mates rates and friends and family discounts, don’t shy away from occasionally doing something for free when it makes sense. It’s not about cheapening your work; it’s about strategically building relationships and creating opportunities. The right balance of generosity and clear boundaries can ensure you’re not only supporting your loved ones but also growing your business in a sustainable and rewarding way.
Keep your customers happy
