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Welcome to the WISE newsletter, a program of
The Falcone Center for Entrepreneurship at Syracuse University

Friday, August 05, 2005

How much is that discount and what does free mean?

An organization in the region is doing a raffle at an upcoming meeting and members are being asked to donate free or discounted services to be used in the raffle. Hopefully the raffle will spark conversation among members as well as get the members to know and use each other's services more.

Looking at the messages circulating about this raffle, I was reminded of an old lesson learned.
When you give away free time or give a client a discount, does the client know the value of what is being received?
We often forget to qualify the gift. For example, you might give a coupon for 15% discount off of your service, without stating what the normal price is. Without knowing the normal price, the coupon holder doesn't know the value of the coupon and how much money she is being saved.

If I give you two free hours of consulting, you may appreciate the gift, but you'll appreciate it more if I tell you what I normally charge. In fact, you might take the two free hours more seriously if you realize how much money you're saving.

Of course, we don't always want to blurt out our fees, but don't leave the person wondering. Find a tactful way of telling the person the value of your services. You might do it with a sentence on the coupon or gift certificate. You might reinforce it when the person uses your services by stating how much it would cost to do "another" hour or whatever it is.

Finally, we assume that when we give someone an opportunity to use our services at a discount rated that they will jump at the chance. Unfortunately, that isn't always true. Sometimes the service doesn't match the person or the timing isn't right. If the idea is to get someone new to use your service, then consider if you want the offer transferable. Can the person give the coupon (for example) to a friend? If yes, then you might want to mention that and remove all doubt.


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