On Feb 20, 2011, at 5:03 PM, D wrote:
Hi John,

I own a service company designing printed documents, and I recently had a customer ask me for a discount. Initially, I priced the project at about $X, and I'm thinking of giving them a 5%. This is my first big project.

***As an aside, what kind of catalogs do you design, I am interested.***

Would you advise to ever give discounts? Maybe 1%, 5%, 10%, or 20%?

***Discounts are a function of savings you experience on a deal.  Are you experiencing a discount that you can pass on, if not, then no discount.  the price is the price.***

What if your customers provide you with a lot of work, consistently, or you've been working with them for a long time?

***Does this give you savings...  advertisers say 1 ad, $1000 each, 6 ads $800 each, and so on, for exactly that reason.  Your second catalog is easier, so you can charge less for the 2nd...  make them pay full for the first, but move the discount onto the 2nd, 3rd, etc...

First catalog $X....  next catalog $X- 20%.. etc... discount built in but not up front...***

Also, what if your competitors give discounts? Shouldn't you follow this industry standard?

***What is the rationale for the discount... how come they can give one, on what basis... better to have a set price, and give each customer something no other customer gets...  “O, your catalog needs an rfid chip...  I’ll do this for you no extra charge (or whatever...)...  Compete on design, not price.***

You know, even after a few years of being exposed to the idea of competing on design rather than price, it still seems a bit foreign, especially when you see everywhere you go, "25% off" or "50% off".

***Of course, most biz compete on price.., they offer big discounts because they can, based on economies of scale, or they are going out of business...***

Are there a lot of companies that compete on design? (Even Nordstrom has clearance sales and price reductions.)

***I clear out excess too, but I do not compete on price... anytime you see an ad in which the price is not mentioned (or highlighted, otherwise buried) then that business competes on design.***


John

Bookmark this post --- Email this post