Last time we talked about ways to market yourself and improve business. This time, I want to spend a few lines discussing coupons, Groupons, and marketing strategies.
Everyone is looking for a bargain nowadays. We all shop at Walmart, or Costco, or we clip coupons to save money. Have you thought how those companies make so much money? The answer is very simple: It is called “volume.”
That’s it: volume. If, during your week, you perform an average of 20 massages at $70 each, your gross income for that week, before expenses, is $1,400. Obviously, if you want to make more money, you have to do one of two things: get more clients or charge more money.
First, more money. You raise your price to $100. Your gross income for the week goes to $2,000. But wait: we already established that people are looking for a bargain. If, by raising your price, you are discouraging people from making repeat appointments and you lose some of your clients, your profit goes down.
So, now: we need to get more clients. We have established that people are looking for a bargain so we offer a coupon or Groupon. Let us say, for the sake of argument, that we offer 25% off our regular fee of $70. Great: more clients. At the lower price we need to see 27 people to make our $1,400 a week. So let’s bump the number to 38 people to make the $2,000 at the lower price.
As you can see, numbers can be a little scary in our world. In order to make more money we need more volume, but when you can only touch one body at a time, that volume takes a personal toll on you. The greater the coupon value, the higher the toll.
I am not saying that we should all raise our prices and never give discounts. What I am saying is that you need to carefully balance between the discount and the amount of people you can draw in with the coupon. If your goal is to introduce new people to your service, a coupon is fine. But, if the idea is that you will consistently accept coupons and give discounts for your services, you may be setting your price to a new low that you cannot go back to your regular pricing. Typically coupons are a good thing in moderation, but as the old saying goes “too much of a good thing can be bad.”
Think about your overall income needs and set your prices accordingly. Then you decide if you can afford to offer discounts or to accept Groupons, or other marketing tools. As with any kind of contract, read the fine print. Groupons sound great when you are the purchaser, but not so great after you have signed the contract to accept these in your practice.
Be well and prosperous everyone.