On Pricing: Why discounts don’t work

chrislema-face

dentist-discounts-dont-workThere's a new dentist in town

I don't remember exactly when this dentistry practice showed up in town, but I doubt it was a year ago. So it was a relatively recent event—one that caught my wife's eye. We'd been living here a little over a year and I'm sad to say finding a dentist hadn't been on the top of our list.

Ok, not sad about it at all. I have irrational fears related to going to the dentist—for no good reason at all. I'm the guy who pays extra to get the nitrous gas to calm me down. Every. Single. Visit. So yeah, now you know that about me too.

But my wife loved them and so I went. Because I love my wife. And each of us were prescribed a course of work that would help us. And that's when they gave my wife her prospective bill.

To say it was high is to insult all things that are high or like to get high.

The better term would be outrageous. Thousands and thousands of dollars out of pocket (after insurance). And if they were doing reconstructive surgery that might have made sense. But you'll have to trust me, my wife's mouth is great. She simply had a root canal that had gotten re-infected.

But this wasn't the first time we'd ever been to a dentist in our lives. So we had a sense of what it would cost and let's just say it wasn't worth another Montblanc watch.

So we said no thank you.

When someone charges you premium dollars, your first inclination is to assume value. That's just the way that works. Look at two bags of luggage and if one is $79 and the other is $279, you end up with some immediate assumptions about value.

But if it crosses a magical line, you just end up thinking that someone was smoking crack when they came up with that price tag. Few people buy luggage that is $2,790, for example.

And then six weeks later….

I know, at this point you're like… enough with the story man, how does this relate to discounts…

So six weeks later we were entering the holiday season, November or December of last year. And guess who called? The dentist. If Melissa wanted to do that work, they had some openings. And you know what? If she scheduled it now, they'd get her a 50% discount.

Half Off.

See, there's that magic discount. It comes as such a gift that few of us ever turn it down. It's so great. So helpful. Such a great incentive to take action.

Six months later…

We said yes, of course. We took the 50% discount. My wife smiled all the way in and out of the dentist office. And we paid only half of the bill. And honestly, until today, it was the last I thought about them.

Today she said it was time for her check-up and she was heading to the dentist. I didn't have an issue at all.

Until she called afterwards and told me all that they had to do—for no less than $900. For a cleaning and a cavity. That's after insurance covers something.

You can imagine what I said, right? After all, I've now been trained, right?

I said no. That's my thing. I say no a lot.

Immediately the price of the cleaning dropped in half—so we said yes to that.

Oh, and if we donated to some gift drive, they'd take 20% of the cavity service.

But do you think 20% off will ever be enough for me? Not a chance. Because I've been trained.

I'm an unhappy customer.

Regardless of whether I think they're prices are insane or not, regardless of whether I think they're pricing on value or not, regardless of whether I think they do a job or not – one thing is for sure, right?

I've been trained to expect a discount. And a big one, at that.

If I get quoted anything – regardless of if it's expensive or not – I'm now waiting to get a discount. And if it's anything less than 50%, I'll be unhappy, right?

Discounts don't work

That's what discounts do. They train us in a way that isn't helpful. Not just unhelpful for the organization, but honestly, unhelpful for me. Because now I'm constantly unhappy about anything going on at the dentist until I hear “50% off”. Period. That's the only thing that will make me happy.

And that's never what they thought they were doing, when they were creating that offer.

So do me a favor—think twice before you create discount codes.
It may be hurting you more than helping you.

About Chris Lema

Chris Lema has been working with WordPress since 2005. Over the years he's been a blogger, a speaker at WordCamps, a coach for WordPress product companies, and the founder of the conference for WordPress business owners, called CaboPress. Today he's the VP of Products at Liquid Web, where he manages the world's first managed platform for WooCommerce stores.

Chris Lema

Chris Lema has been working with WordPress since 2005. Over the years he's been a blogger, a speaker at WordCamps, a coach for WordPress product companies, and the founder of the conference for WordPress business owners, called CaboPress. Today he's the VP of Products at Liquid Web, where he manages the world's first managed platform for WooCommerce stores.

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