I was talking to an automotive detailer yesterday who said they were trying to fill up their schedule so they discounted their normal detail package from $135 to $60. They said they filled their schedule quickly, but they had a feeling that these customers probably wouldn’t come back.
And they are probably right.
There are a few issues with this strategy.
- Don’t confuse being busy with being profitable. While he stated that he was trying to fill his schedule, one $135 detail pays over double two $60 details. Their marketing budget would be better spent trying to find more $135 clients.
- As he already guessed, the customer that wants a $60 detail is not the same as the one who wants the $135 detail. $135 is 125% more than $60. That’s a completely different price point. These more price sensitive customers won’t come back when the price goes back to the regular $135
- A huge discount like that risks alienating his existing customers. If the regular $135 customers learn about the $60 promotion they are going to be upset that they are paying way more than double for the same work. They will likely either ask for a discount in the future. Or look for a different detailer.
- The profit is in the margin. At $60 I’m not sure they are even covering their base costs, like rent, electricity, and labor. Plus materials for each job.
While there might be a case for filling your schedule to help cover your costs, there are definitely downsides to this strategy.
Next time we will look at other pricing options that work better to increase your revenue and profits.
