Defining Your Prices, Discounts, and Discount Policy

Defining Your Prices, Discounts, and Discount Policy in a way that honors you and your business.

In our previous post we touch briefly on the value of defining your prices, discounts and discount policy. Today I thought we could expand on that and offer a few tips to help ensure that you are getting paid your worth, and are easily able to cover your operating expenses each and every month.

Check out this Facebook Live or skip down and read the recap.

Defining your prices

Most people look around at others in their field and set their prices based on what they see. Some will go low, as they feel this is necessary when first starting off. Others will go for the medium range, as they believe it will make them more competitive.  Many people fail to look at their own operating costs before putting these prices into place, which I have seen need to pricing fluctuation.

You are not alone in these struggles. I have been there with you, and more recently than I would like to admit. But, like me you don’t have to stay there!

The shifting point for me was the Profit First method. I am not a Profit First expert, I simply read the book and highly recommend it. But I am a believer in the system as it helped me put things into place to ensure that I am making a profit, getting paid, and have more than enough money to cover business expenses.

Click here to find a Profit First professional. 

Here is what I did…

1. I divided the price of my standard package into four categories: PROFIT, OWNER’S COMP, TAX, OPERATING EXPENSES
2. Looking at these numbers I asked myself these questions?
   – Am I getting paid my worth?
   – Can I live off of the Owner’s Comp?
   – Do I have enough money to cover my operating expenses?
   – Are there any operating expenses I no longer need?

This was a huge step for me, one which lead to me actually writing and receiving my very first commissions check, and I have to say it felt freaking amazing to do this!

Defining Your Discount Policy

First let me say that you don’t have to offer discounts and if you are struggling with the questions as to whether or not you want to offer discounts, take a minute to consider these three things…

1. How much income am I going to receive from the sale after discount?
2. What benefits will my business receive by offering this discount?
3. Am I 100% comfortable giving this discount?

If you decide that offering a discount of any kind is not in your best interest, then your discount policy is simple. You do not offer discounts. This can then be documented in the legal documents of your website so that it is clear to you and those visiting your website. I would also suggest practicing how to address the discount questions. Feel free to pop over to 3 Things to Consider Before Offering the Friends/Family Discount for a little inspiration on how to say no. While this article specifically talks about working with family and friends, it also offers some great suggestions for saying no that you can build on to use in any circumstance.

What discounts are available?

Let’s say you have decided you are 100% comfortable offering discounts in certain circumstances. Taking the time to identify the discounts and how it impacts your finances. What I suggest is to follow the steps above  with the new discounted price to make sure it still feels good to you.

1. Divide the discount price into four categories: PROFIT, OWNER’S COMP, TAX, OPERATING EXPENSES.
2. Looking at these numbers I asked myself these questions?
   – Am I getting paid my worth?
   – Can I live off of the Owner’s Comp?
   – Do I have enough money to cover my operating expenses?
   – Are there any operating expenses I no longer need?

Next define exactly who is eligible for this discount. This could be defined by certain groups that are always eligible or the sales you plan offer throughout the year. After all a sale price is a discount.

Document all of this some where that is easily accessible to you so that you are always prepared to answer questions regarding your pricing and discounts.

Final piece of loving advice…

I totally get how difficult it is to put yourself out there with a price tag. The doubts and questions that arise are endless, and if feels really crappy sometimes putting a value on what we offer. So I thought I would close today by reminding you that you are worthy of more than you imagine.

You are offering something the world needs. Something that helps others live happy and amazing lives. It doesn’t matter if you are developing new breakthroughs in modern medicine, offering a feel beautiful boutique experience or warm cozy socks for winter days.  All of these bring a level of happiness into the lives of those who need them and that my love is an incredible value to offer!