📂 Offer discounts and pro bono services sparingly

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📖 The following is an excerpt from my work-in-progress book, Founding Marketing. It's a (very) rough draft of thoughts, notes, and research... so feel free to reply with your feedback on what I should expand more on and what needs to be clarified. Enjoy!

Discounting: The double-edged sword.

It can nudge prospective customers just enough to make a decision in your favor, and it can also cost you thousands of dollars in revenue over the lifetime of the customer with you.

“Most of the time, discounts are a cop-out. It’s just easier to lower the price than to do the work necessary to sell at full price (or even higher).” — Lincoln Murphy​

But there are ways to use discounting without sacrificing your revenue:

• Use discounting to get people to pay more, not less: Discounting is often used reactively. A price-sensitive prospect or customer ready to cancel can force your hand to offer a discount. But what if you could use the discount proactively? Making special offers to customers to upgrade to a higher-priced plan can increase ARPU and LTV with little work, and your customers will love you for it.
• Minimize the long-term impact: Instead of offering lifetime discounts, consider offering multimonth or one-year discounts. Even a 50% discount for three months is far more profitable than a 30% discount for twelve months over the span of a year.
• Use terms to your advantage: Offering a discount doesn’t have to be a one-sided deal. Asking for a referral, case study, quote, or other forms of co-marketing is perfectly acceptable.
• Another way to utilize discounting, especially for products with ARPU in the single digits and low double digits, is to offer scaled discounting for annual plans.

Offering 50% off an annual plan at your lowest-priced tier, 35% off a mid-tier annual plan, and 20% off the highest-priced tier can help incentivize longer commitments from lower-paying users while still capturing more revenue upfront. This can reduce churn, increase working capital, and increase the adoption of annual plans.

Offering a concierge migration (for all or certain plans) or a free consultation can be a major draw to encourage new customers to sign up, but they often get overlooked when they’re always available.

Instead, offer a concierge migration or a free consultation quarterly at most. This way, you can create the urgency needed to get prospects to actually take you up on the offer.

Black Friday / Cyber Monday offers

• Extra discount on annual plans
• Access higher plan for the price of a lower plan for a year
• Additional services or setup help
• Extended trial / first month free
• Discounted bundle (if you have multiple products)
• Access special content (e.g. course, training, book, etc)
• Priority support
• Lock in legacy price (and increase prices after)

Here are two examples:

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—Corey

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