I just want to share with you the cost, the potential cost of giving big discounts to your customers, or even giving some things away for free. I’ll start with a short story.
And that is my book, Money, now has pushing 3,000 reviews. What? 94-95 percent of them are 5-star reviews. But recently, very recently, I’ve had 3 one-star reviews. And it’s quite rare for me to have 3 one-star reviews in a short period of time. I did a little bit of investigating, and guess where all 3 one-star reviews came from. Now, often, it’s competitors or haters. But actually, all 3 of these were from 99p Kindle purchases. Aside from pissing me off, in fact 2 of the 3 purchases who took the time to leave me a one-star review said, they only bought the book, because it was 99p. Oh, the irony of someone buying 155,000-word deep dive exploration on money. they paid 99p for it, and they can’t see the value in it.
So, for me, I think that’s a great analogy and story for when you give too much away, or too big a discount, or your prices are too low, you can often attract the wrong kind of clients. Let’s be honest, I did try and write my book for money, for anyone who wants to know more, make more and give more money. But I didn’t write my book on money for someone who doesn’t want to improve their financial situation, and cannot see the benefit of content that they pay 99p for. I mean how can anyone pay 99p for a book on Money, and not get something out of it. I mean for f**k sake. You know now, ironically, someone who paid £20 for that book, probably would have read the whole book, read the whole book again, read the whole book again, and seen the value that’s there within it.
So, look I’m all up for being critiqued and getting fair feedback. But I can certainly say that the majority of Kindle purchases haven’t even read the book. One guy even said, how many trees died for this copy of this book? Well, no tree dies for a copy of a Kindle version of a book for f**k sake. No, trees for all the audiobook reviews. But I am definitely all up for giving a lot of free content and value out there. Hopefully, you get good value for my podcasts and live videos and everything else. I’m definitely good for that.
But someone asked me for a discount just today, actually for the Inner Circle Mastermind Elite Programme I ran. Now, in the past, I would have been a bit soft. I would have thought, I really want to give back to people. I want to cut good deals. I want them to be happy. I want to win business. Okay, I’ll give you a bit of a discount. But if you attract the kind of people that want to pay a fiver for something that’s worth a tenner, then you’re going to attract the kind of clients that are going to consume your overhead. You’re probably going to loss make on those clients even though you felt like it was a good business. okay, it might be good for cashflow, but it’s bad for profit.
I had a chat with a friend of mine. He’s a business owner that said recently “I don’t want to save everyone. I don’t want to help everyone. I only want to help people who want to help themselves.” So, he’s made this very clear distinction with the kind of clients that he’s trying to attract. And he’s not trying to attract what the market calls the freebie seekers.
Now, if you like, I have to be careful when I’m talking here, because I also have the opinion that a lot of people just need some help. Sometimes, if you’re going to give people some good advice that doesn’t cost them a lot of money, that can really give them information that could help them that can then lead them to buy other products and services with you. I certainly don’t want to play God in who I choose as a client and not.
I was just messaging a few people today, giving them help or advice. One person said he didn’t have any money to spend on a mastermind or mentoring. But I still answered his questions and gave him advice. I want to choose to do that. But I don’t want to discount and have really low prices that attract these kind of Kindle buyers who won’t even read the book and paid 99p for it. They paid less than someone who bought it for a tenner, and yet, they’re pissed off with the book even though they didn’t read it. Yet someone who paid a tenner felt that they got really good value.
I’m also a bit pissed off with Amazon, because I don’t want actually to sell my books for 99p. I want to sell my book for £12 or £15. I want them to be at the higher echelon. And it’s not fair on someone who’s paid 12 quid for my book when Amazon or some other power that be, whoever it is decide to discount them to 99p on Kindle. So, I’d just emailed my publisher, and I said, is there any way we can stop selling my book on Kindle, or stop selling my book for 99p? Because I do not want to attract these people. You know, piss off somewhere else.
Yeah, okay, this is a bit of a rant for me. But you’re going to get this kind of clients too. if you’re in property, you’re going to get this kind of tenants. If you sell products and services, you want those customers to go to the high volume, low margin providers. Audemars Piguet and Rolex don’t want to attract Casio buyers.
So, you want to think about positioning of who you’re trying to attract and price accordingly, up your prices probably. A lot of people are scared about upping their prices, because they’re worried about losing clients. But you’ll probably only lose the clients that you want to lose, and those clients are taking space. They are filling a vacuum and a void, which if were empty, would attract a higher type of client who would want to pay 20 quid for a tenner, or who would pay fair exchange value, who perceive good value, and then wouldn’t bug you and drain your overhead.
Now, the funny thing with pricing and business, is, it’s a perception. Someone who pays 99p for a book that should be a tenner is expecting them to make them a millionaire overnight, or it to be amazing, or perfect, or whatever. And as soon as the slightest thing isn’t right for them, they’re going to leave a massive one-star review about it, and complain about it. They’re probably the kind of people that cheating the system, gaming everybody, trying to get everything for free, trying to screw over providers, and just want to go and bitch and moan about everything.
Hey, look, I’m sure we’ve all been there and done that. I’m not judging. But I don’t want them doing that on my business or on my books. Go, and tell it to my competitors, please. So, I didn’t intentionally do this. But intentionally Amazon, or my publisher, or whatever’s happened is attracting the wrong kind of clients. I just want to shut that door. So, is there anywhere in your products or your services, or you’re just a coach, a consultant, you’re giving a lot of free advice, and you’re helping a lot of people, and you’re feeling a bit resentful, you’ve got to put your prices up. You’ve got to put a price wall in the way to test the seriousness.
One other thing about giving discount as well, is like, I actually do like giving discounts. I want people to feel like they’re getting good value. They’re getting the best possible price from me. But in the past, I’ve given discounts. Then they have gone, and told other people who didn’t get the discounts, and brag about it. And then the people that didn’t get the discounts had come back to me, and go, well, I didn’t get discount. That’s not fair. That costs me a load of money.
Now, I’ve done good, and I’ve felt like morally and ethically, I’ve been as kind as I can to this person. They’ve just turned it against me. And this costs me a load of money. So, you think you’re being kind when in fact, you’re not. Often, the kindest thing you can do, is, say to someone, this is the price, and you’ve got to pay it. Now, when they pay something, fair price for something, they see the value, because value is perception as much as it is reality. The more we’re set up to perceive the value, the more likely we are going to implement on the products or services that we’re offering. So, the best thing you can often do, is, not give your clients a discount. Because remember, it’s not fair to everyone else who’s paid. I really don’t think it’s fair for Amazon to charge 99p on Kindle when other people are paying 10 or 15 quid. It’s not fair. It’s not right. Amazon, if you’re listening, which you’re not, and you’re probably not going to do anything about it, but think about that.
So, yeah, okay, this is a bit of therapy and a rant for me as well. But I would certainly know that you can up your prices by 20 percent, and it’s not going to affect your business in any way, probably other than positive. You’re probably going to attract better clients who have more money, who are the right type and the right niche for you. You’re going to have higher margin. Therefore, you’ve got more money to have as profit, and to reinvest into products and services. If you do this way to some clients, it’s probably going to be the kind of clients that you wouldn’t want anyway.
So, in my kind of strategy, is, all the people who want free advice, are given free advice. but I’m not giving them any discounts on any of my product, because they can take all my free advice. hopefully, all the people that want help I can help. I can get them to a point, where they can make some money, and then hopefully, save it for my products and services. But then when it’s time to pay for product and services, it’s time to pay.
So, I’m not saying charge everyone and don’t give stuff away for free. Often, a lot of the best goodwill I’ve spent and the people who’ve bought nearly all of my products and services were able to spend 3 months, 6 months, 12 months, consuming all of my free content and building that goodwill with me, and hopefully, getting some results from my free content, that makes them some money. And then they know that they’re going to get results with the paid content. But stuff that should have a big fee attached to it should have a big fee attached to it. It shouldn’t ever be discounted.
My business partner, Mark and I in the past, we’ve discounted our mentoring programme. We’ve done Black Friday offers, or we’ve done really long payment plans. In nearly all the cases, the worst type of client to deal with, with the most entitlement and expectancy, expecting you to do everything for them, give them a goal and your missus for free as well, because that’s what you should do, because you’re the provider, and I’m the customer. And the customer is always right.
At any time we’ve cut a really good deal, I’d say 80 percent of the time, we’ve regretted it, and then ended being the worst type of client. We were probably part of that, because we created the expectation from them by reducing the price. Now, had we kept the price as it is, they may have bought it. But they’re coming with a better expectation, or a more clear guidelines of what’s expected.
I don’t think we’re in an age, where the customer is always right. I don’t think the customer can act like, demanding, entitled twats like we’ve all acted in the past. And I’m not saying this, because I don’t think my client should be like that with me. I’m saying that because we’re in a social media world now, where everyone’s got an opinion. It’s very easy for information to be passed freely. So, I think we should be respectful of providers even when we are the clients. We’re not always right as the clients.
Anyway, I’m going a bit off on tangent. I think I’ve made my point. So, thanks for tuning in. Have a great day. Remember, if you don’t risk anything, you risk everything.
"If you don't risk anything, you risk everything"
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- The true cost of giving big discounts to your customers - 4th February 2019