It’s time to stop negotiating the Family/Friends discount
Have you ever heard someone say, “Hey my sister does that, and she can give us a great deal!” Now have you ever heard that knowing you are the sister, expected to offer up that that great deal as a family/friends discount?
This is one of the biggest struggles I have found among my entrepreneur friends. The minute they open up shop, there is always a line of family and/or friends looking to see what kind of discount they can get from you.
Because we love them, it is hard to say no. And I have even given out significant discounts to family and friends before they asked for one.
For a new business owner, offering discounts to family and friends may even feel like a good idea. The trouble with this, is that when we are trying to launch a business, every penny we make matters – A LOT! Not only that but when we offer up unnecessary discounts we run the risk of
- Undervaluing our products and/services
- Setting an expectation our business may not be able to continue honoring
- Short changing our bottom line and overall profits
- Feeling resentment towards our friend or family member
- Providing lower quality service so we can hurry up and move onto the full paying “real client”
Keep in mind that while we love our family and friends, they love us too and want us to succeed.
Here are a few things to consider before offering a family/friend discount request …
What is the full cost of my product or service?
Take the time to calculate what it costs you to offer this product or service before you offer a discount. Don’t just calculate the supplies necessary, but the time you will spend as well. Think of the other expenses not directly associated with a product of service (rent, utilities, phone, internet, website, etc.) and ask yourself if you are making enough money to easily cover these each month and more.
Remember to stay in business and thrive you have to be able to show a profit, this includes when selling to family and friends.
What is the value this discount will bring to my business?
When it comes to offering discounts to family and friends we often think only of the value to our relationship with that person. Now, it is time to think about what the value will be to your business if you offer this discount. Is it going to help you grow your business? Would the money you receive if they paid full price benefit your business more?
How am I going to feel when it comes time to provide the product/service?
Are you going to want to treat this “discount customer” with the same enthusiasm you would treat a full price customer? Or are you going to do a less than stellar job so you can hurry up and move onto someone else?
Can I treat my friend or family member as a “real client”?
When someone pays you the asking price for your product or service, they deserve to be treated with the full respect of any other client. If you are unable to treat them as a client a discount is definitely out of the question, and you may want to consider referring them to another business.
What’s the risk of resentment?
When it is all said and done are you going to feel valued and appreciated by your family member or friend or are you going to feel as though you have been taken advantage of? Are you going to feel resentful?
What if I can’t really answer these questions?
If you aren’t sure how answer any of the questions above, then hold off a while before making your decision. Explain (if necessary) that you aren’t comfortable at the moment offering discounts, because you are committed to the success of your business. And then do a little soul searching, and number crunching until you are sure how to answer.