Why offering discounts hurts your guitar teaching business
A common practice among guitar teachers is to offer discounts as an incentive for new students to sign up. The idea is that a discount will give an extra push to somebody unsure whether they should go with you or not.
While it sounds smart in theory, there's some big problems with offering discounts:
It cheapens you and your lessons
When you see a product at a store in a 'discount bin' what's your first impression of the product? Sometimes you will recognize it as a great deal but most of the time you know that products that end up in discount bins are usually junk that the store is having trouble selling. The same thing happens when you discount your lessons. Instead of being seen as a quality product on the top shelf, you're basically throwing your lesson service into the discount bin. While potential students won't consciously think this way, they will subconsciously. There have been various studies that have shown that people actually a product or service as lower quality when it's discounted. In other words, simply lowering your price is enough to make people think your lessons are low quality!
It can cause issues with other students paying full price
Let's say you start promoting a big discount on your lessons for new students. You promote it on your website, social media account and offline using flyers and posters. How do you think one of your current students will feel when they see that new students are getting a better deal than them? Does that send the right message to your loyal students?
The chances are that your existing students will feel cheated when they see that any new student will be getting a better deal than them. There are two possible ways most people deal with situations like this. The student will either ask you for a discount to remain a student or they will keep paying the same rate but will likely hold some resentment against you. That's not the way to keep your students happy and thank them for their loyalty.
Discounts can hurt your existing students and tarnish your reputation in their eyes. Do you really want to risk a relationship with a loyal student for the chance of gaining a new student at a lower rate? It's never smart to risk your current students for a chance of gaining new students.
How much will you lose from that discount?
Many teachers don't realize how even a small discount can negatively impact your income. Let's say you offer a small $5 discount off your lesson rate. What does that mean from your point of view? It means that you're basically throwing away $260 every year - per new student! So you might be thinking "yes I'd be earning less, but at least I will have a new student". That's only true if the discount causes a new student to choose you. The problem is that a $5 discount isn't likely to change a potential student's mind. Discounting from $30 per lesson to $25 actually won't make much difference to whether a student chooses you or not. The chances are that any new students you gain would have been happy to pay the $30 anyway. So the $260 you're losing for a new student is likely for nothing. People generally only change their minds on a purchase when the discounts are significant. So if you offered a $10 discount you're likely to gain new students that wouldn't have chosen you before. But this time you would now be losing $520 per year. That's an expensive way to gain a new student!
If you are considering discounts, remember that there's always a cost involved with a discount. Most of the time you're better off looking at other strategies.
Discounts lose their meaning over time
If you gain a new student by using a discount, over time the student will forget that they're paying a lower rate than usual. So the student will stop thinking "I'm getting a $30 lesson for $25" and will start thinking "These lessons cost $25". This means your discounted rate will actually become the standard rate in the new student's mind. You lose all benefit from the discount while still losing money on it.
When you compare the long term effects of a discount to alternative strategies, it just doesn't make sense to even consider offering discounts. Yes you will likely gain new students using a discount and it will feel like you're doing the right thing, but when you consider the alternatives, it just isn't a smart choice.
Alternatives to offering a discount
The big problem with discounts is that they reduce the 'perceived value' of you and your lessons. Instead of being seen as valuable service that offers great quality lessons, you're sending the message that you're a cheap service similar to products in a discount bin.
There are two far more effective strategies you can use than offering discounts:
A free trial lesson
Many guitar teachers already use this option and it's a good starting point. By offering a free first lesson you're giving yourself the opportunity to prove to a potential student that your lessons are worth the fair price you have set. Free first lessons don't cheapen your image and they don't cause resentment with your existing students. We highly recommend you offer free trial lessons instead of discounts.
From an income point of view, let's say your usual rate is $30 per lesson. Instead of offering a $5 discount - which would lose you $260 a year in income - you offer a free trial lesson. How much do you lose from that free trial lesson? $30. Think of it this way, would you rather pay $260 to gain a new student or $30? When compared this way hopefully you can see how bad discounts actually are. Potential students are far more likely to take up the offer of a free trial lesson compared to a discount so it's a far more effective strategy.
Offer something extra of value
This is the best option by far and sends all the right messages to potential students. This is what we encourage guitar teachers to do because it actually raises your value in the potential student's eyes rather than destroy it like a discount does. The strategy is simple: offer something extra for free to any new student.
There are so many different things you can offer such as:
- A capo or other guitar accessory as a gift
- An eBook
- Free access to an online course or VIP content on your website
- Free 30 minute skype lesson outside of normal lesson times
- A pack of guitar flash cards
- Service of the student's guitar (eg: new strings, truss rod adjustment, clean)
So why is this more effective than a discount? It's because the new student is getting something extra as a bonus. You're giving the student more value than normal rather than trying to offer a lower price (and lowering your perceived value). This is how you should think as a guitar teacher rather than thinking about discounts.
Giving away an eBook or a capo doesn't cost you much (if anything at all), but it leaves a lasting impression on the student. The reason we work hard with our members to help them start selling their own online courses or launching their own products or extra services is because we know how big a difference those extra products and services can mean to your success.
Advanced Strategies for Serious Teachers
Too many guitar teachers take the 'trial and error' approach to their teaching business. Instead of guessing your way through your business, get it right from the beginning. The following resources will get you started with best practices and avoid the mistakes so many other teachers make.
BPL-08 - Set the right rate for your lessons that sends the right message to potential students
EXP series - Learn how to add value to your guitar lessons and grow your guitar teaching business
BMK series - Use effective marketing strategies to attract the right students for you
SWOT Analysis course - Analyze your local market to figure out the best way to promote your lessons and attract the right students
If members would like assistance in working out an effective strategy to encourage new students to sign up, contact us here and we'll give you a hand.
The key message to remember here is that discounts reduce the value of your lessons from a prospective student's point of view. Instead of doing something that reduces perceived value, look for ways to give students something of value extra.