Axiom CPA, P.A. - Axiom CPA Blog

I've made many mistakes as a business owner. Some of these I can laugh about. Some nearly bring me to tears. One of the biggest mistakes I've made is offering discounts to customers who can't afford me. Sooner or later these interactions end badly and looking back over the whole of the relationship I can't see where the good experiences outweighed the bad. If you want to work with someone who can't afford you then do it for free. Otherwise charge retail. That sounds harsh, but here's how discounts can kill your business if you let them.

Discounts encourage customers to use price to determine value. Customers who can afford you judge your work by its outcomes. If you must offer a discount to enable a customer to do business with you that customer will judge your work according to the price paid. They will never understand your value and you will never get over their inability to appreciate it.
Discounts to the wrong customer invalidate your pricing strategy. Good businesses put thought into why they charge what they charge. When they offer improper discounts these businesses thumb their noses at all that planning. Soon they find themselves doing the type of work they intentionally planned NOT to do.
Discounts are unfair to your ideal customers. Your best customers hire you with an expectation that you spend your time and energy working with other people like them. They expect that all this time around like minded customers makes you better at serving their interests. When you work with people who can't afford what you sell you become less valuable to those customers who can.
Discounts cripple morale. When you routinely make price concessions for people who can't afford your work you begin to resent not getting paid what you are worth and you question your ability to get your asking price. This resentment and questioning slowly eat away at your confidence and it shows whenever you sit in front of a new prospect.
Discounts never go away. Allowing the wrong customers into your business is very disruptive because they never volunteer to end the discount and pay full price. Instead they stick around and take up valuable space. They take more time to service and you will never be able to get that time back, until it ends badly. Eventually you will get fed up accepting less than you're worth or (more likely) they'll think even your discounts are too expensive. When they leave you will look back on the day you first allowed them to do business with you and you'll wish you'd thought twice about walking them through the door with a discount.