DJGold

davidjones@a2zmobilemusic · Posted: Wed Aug 16, 2006 3:36 pm Post subject: Discounted Services.... Or Not?

I read on board about a dj offering discounts to customers for paying early. i was sceptical at first. i tried it this past weekend when a potential customer emailed about new years eve. i quoted her $1200 and she replied right back. she said she was very interested and wanted to know if i offered any type of discounts to seniors since this was a event for 200 people in a assisted living facility. so i told her i could discount it 15% if she paid the balance in full within 30 days of signing the contract. she jumped at it! she saved $180 but i got paid today.

summary... if you like to have ready cash flow this works perfect. to replace, maintain equipment, or purchase supplies ahead of time. etc.

what is your opinion on this?

Joseph Ivy · Joined: August 16th, 2006 Posts: 133 Location: Glendale, AZ

I only offer discounts for causes I believe in. The can include JR High dances in economically depressed neiborhoods or fundraisers. I consider these discounts to be charity. (Actually, I do offer a discount through one of my advertising channels, but I have never gotten a gig through that channel.)

From a business standpoint, I would just compare the present value of the discounted payment with the future value of the of the full payment. You discounted 15%. If you invested the total payment today, I do not think that you would be able to make that 15% back before the event starts.

Of course, if you NEED the money for something pressing then that is another story.

davidjones@a2zmobilemusic

just like any business i need more advertising, i need (want) more gear etc. as long as i'm booking gigs and making what i need per gig (!!) i might work out. i have not thought about the possibility if someone cancels an event. refund? partial refund?

these are the kinks to work out. all this lady want was a ballon drop and dance lights. no problem. i only made $800 last year for new years!

Joseph Ivy · Joined: August 16th, 2006 Posts: 133 Location: Glendale, AZ

I always include a non-refundable 50% retainer. It might be worth providing a discount if the entire discounted rate was non-refundable. I still don't think that I'd do it though.

I like spreading out when I get money. It allow me to convice my wife to let me buy more training and equipment. Last night I convinced her to let me go to a $600 workshop by pointing out that I have got $700 of payments coming before then. If I would have gotten that $700 already, it would be going to fix the fence in my backyard.

dokai · Posted: Thu Aug 17, 2006 10:47 am Post subject:

Joseph Ivy wrote: Last night I convinced her to let me go to a $600 workshop by pointing out that I have got $700 of payments coming before then. If I would have gotten that $700 already, it would be going to fix the fence in my backyard.

LOL! Classic!

I love how none of the "regular" money is allowed to be spent on equipment and other business expenses, but if a vehicle or home repair is needed I immediately hear "Honey, don't you have a gig coming up soon?" :hahaha:

Joseph Ivy · Joined: August 16th, 2006 Posts: 133 Location: Glendale, AZ

!!! Exactly !!!

goodknightdj · Joined: August 3rd, 2005 Posts: 149

David:

That was me that started that thread on Sid's board and Ryan's board. Anyway, one thing that needs to be stated is that, if you are going to use a discount business model, you need to raise your primary fees. I jacked the hourly rate up $100/hour across the board. If they take the discount I'm still making more money and if the don't I'm making a whole lot more money.

DJ Teddy Bear · Posted: Thu Aug 17, 2006 12:07 pm Post subject:

I've always questioned the business model that says to raise your rates so that you have more room to haggle and offer discounts to get the deal.

Customers do not like it either. It's one of the things the average person hates about purchasing a car. Or airline tickets. You're on a full plane, and you can't help but think how many people that don't know each other, are paying the same fare. The answer? Very few.

HOWEVER, if you have a standard policy about it, that's different. But in your case, you gave a 15% discount for paying 4 months early. That's way too high. That's equavalent to having a credit card that charges 45% annually! The client probably would have pumped at a 10% discount - which is also a bit too high. A propper discount for this would have been 6%: 1.5% per month paid early.

Joseph Ivy · Joined: August 16th, 2006 Posts: 133 Location: Glendale, AZ

Teddy, that was very well stated. It didn't occur to me to state the discount in the form of debt. I am going to use that when discussing discounts with local DJs. Thanks for the idea.

SteveCie · Posted: Fri Aug 18, 2006 12:16 pm Post subject:

In business, the norm for prepayment is a 2% cash discount. Prepayment meaning, payment prior to the expected due date. I really think 15% is way out of line for a discount. True, it is an extremely competitive market that we find ourselves in, but after all, we are the competition.

I'm not saying lets fix prices, but we all need to earn a living, and cutting prices is not beneficial. Raising prices to make wiggle room for haggling is old school, and the consumers really don't like it.

By shopping our regions for deejay services, and by communicating and networking with each other, we can hopefully realize the unleashed earning potential this business has to offer us.