IN[FOCUS]

 “Sale” Image: Danilo Rizzuti / FreeDigitalPhotos.net

Discounts and why you probably shouldn’t be offering them.

There has been a lot said on this topic, but I wanted to share with you my viewpoint on discounts and why I think they’re dangerous.

Groupon and other group-buying websites have been growing at a ridiculous pace in the last 12 to 24 months.  You’ve probably used the site yourself.  The concept is simple: one website organizes a bunch of wallets to head to one place.  It’s not exactly a new concept; stores have been using ‘loss-leaders’ for decades. 

Lately, I’ve seen local photographers advertise “90% off studio fees” or “buy one print, get 5 free” or other crazy deals like that.  What’s the first thing I think of when I see that? It’s probably garbage photography. It might not be true, but that’s honestly the first place my mind goes.  If they’re willing to reduce their price so much, they must not be that good (or else they wouldn’t need to discount).  That might be extreme, but tell me you haven’t thought that.

By discounting your product, you are telling your customer the pricing you have initially offered is too much for the value you are providing.  You’re telling them that you’re not worth as much as you said you were. You’re teaching them to expect that if they wait just a little longer, they’ll get an even better price. That is a dangerous precedent to set.  

If you haven’t been on the weddingwire.com bride forums or any other open discussion website, check one out today. Brides talk to each other. They will openly share that they saved 15% off at caterer so-and-so by simply asking.  Or they will advise tactics like threatening to walk out the door to get that discount.  More than ever before, couples are armed with this kind of information. Once you get a reputation of any kind—be it for discounting or anything else—it will take a long time to change.

Think about how you feel when you hear that smarmy “Oh Boy!! You lucky consumers, you!” from the automobile industry. “You get the opportunity to buy one of our shiny new cars for the same exact price that our employees pay!!  Congratulations!” That always drives me nuts (pun intended).  You don’t walk away thinking, “Man. That car will be the car of my dreams.” Instead, you walk away asking yourself whether it’s really how much the employees are paying. The bottom line is you’re still thinking about price and you’re wondering, “I wonder if I could pay even less had I just asked?”

My favourite author, Seth Godin, said this in a 2007 blog post: “Maybe the reason it seems that price is all your customers care about is… that you haven’t given them anything else to care about.”

By offering discounts, you’re taking the conversation away from the experience of working with you and the amazing film you’re going to make, and you’re spoon-feeding your customers to be thinking about negotiating prices. 

Be firm on your pricing. Have enough confidence in the art you make to walk away if you have a couple who demands a discount. Another couple will walk through the door.  A cinematographer friend of mine from Australia named Dave Cowling pointed out this website to me a few years back, which talks about discounting.

I’ll add one more thought that may help you as you continue to grow your business.  In my opinion (and there will be some people who disagree), there is a benefit to forming a strong relationship with a particular planner and sharing privately that you will give their clients special privileges based solely on working together.  I wouldn’t advertise this, but I would argue at this point it’s not called discounting, but merely offering a reward to clients of ‘so and so wedding planner’ as a thank you.  

One other thing that you may do which I don’t believe to be harmful is giving repeat customers a slight break (your bride from last year’s sister is getting married and now is calling you). Again, the difference here is that you’re not reducing your price in order to get a sale; you’re rewarding a good customer with a generous offer.  That would be the only way I would ever say discounting is a good idea.

Bottom line: discounting on a site like Groupon is fine for restaurants that have 100 seats to fill each night, but we are not in a volume industry.  We are not selling toothpaste. This is a once-in-a-lifetime experience.  Even if you have three or four teams, I still would not recommend discounting. It’s only a race to the bottom.

Andrew Sorlie

Andrew and Emily Sorlie are the owners of Honey & Dear, a successful Toronto, Canada - based wedding cinematography company. They attended their first [In]Focus conference in Austin, Texas in 2010, and it radically changed the direction of their company. With the knowledge and experience they gained, the Sorlies rebranded their now-flourishing business from Sorlie Arts to Honey & Dear. Together, they have filmed more than 80 weddings all over the world including Australia, Dominican Republic, Singapore & Canada.

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Giving your clients a digital copy not only creates a convenient off-site back up, it also enables them to share your work more easily. There are tons of online companies that offer custom flash drives, I’ve had great luck with Flashbay & usbmemorydirect.com.

Do you offer digital copies on flash drives or other medium? Feel free to share your experiences by commenting below. The IN[FOCUS] community would  love to hear what works well for you and your company.

Jet

Jet Kaiser saved up enough money to by his first camcorder at the age of 14 and he's been creating films ever since. He eventually created the Indianapolis-based, Jet Kaiser Films where he collaborates his with his lovely wife, Dani. Together they produce cinematic, story-rich, "motion pictures for those in LOVE™ "

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Okay.  Let’s talk about Cash Deals. It’s probably no surprise to you that Cash Deals to avoid sales tax are illegal. It’s how the world works.  

So you meet a bride or groom and start up a conversation. Things are going well. You like them. They like you. You have their date available. Then comes the business end of things. They put on their game face for the big question. “Can we pay in cash?” the bride asks. (This is generally phrased in one of two ways—either very cautiously as to not offend, or quite stubbornly with the attitude of taking control of the negotiation). 

You find yourself thinking, “Well, if I say no, they might walk… If I say yes, I’ll need to keep this quiet, and he or she better not tell anyone.”  STOP. Right there. Did you see that? You thought about it and how you were going to get away with it. Any further and you would have just broken the law.  

Now I realize that there are going to be regional variances in tax law. But for the most part, you are required as a business to charge some form of sales tax for the services you are providing the product you are creating and selling.  So why is it so common that we get asked? (For us, we get asked about 25% of the time.)  

Some people think that, by avoiding tax, they will be able to get more wedding stuff into their budget for the same price. And there are some vendors out there who are accepting no-tax deals. Here’s the problem. You’re running a business and you need to play by the rules. If you are a hobbyist, you may not charge tax, but I’m assuming this blog is read by professionals. In Canada, one only needs to charge sales tax once they reach $30,000 in sales (EBIT) in any 12-consecutive-month period. After they have hit that mark once, they must continue to charge tax regardless of sales from that point on.

If you accept one wedding as a cash deal, it won’t be hard for you to accept another. And then another. And then another. And then comes tax time. You give your accountant a shoebox of receipts, reporting only 12 of the 15 weddings you actually filmed. Now you’re starting to sweat. You’ve broken the law and now you’re praying you don’t get caught.  

Now, I’m not sure about the United States, but I can tell you that our Canadian Government can go back up to seven years when conducting an audit. They have the right to examine every piece of paper you have. They can talk to your suppliers, your customers, and even your family members. It’s not a matter of if you’ll get audited, but more accurately when you’ll get audited. And if they find something, they will bill you for it. And they will charge interest on what they are billing you for. In severe cases, jail time is part of the punishment. Do you really want to go to jail to save your bride and groom a couple hundred bucks?  (Bueller??) 

There are a lot of positives for charging and collecting tax.  The biggest one is you can write off the tax you spend (on items for your business). This can often help come tax time. The other advantage to charging tax is you are immediately (if not only sub-consciously) regarded as more of a professional. People know they have to pay tax on things they buy; this isn’t a new concept for anyone. They wouldn’t dare ask at a high-end restaurant if the server could hold the tax, right?  Would they ask their realtor if they could somehow just not pay tax when they buy their home?  No. So you just need to be firm and confident. Explain that you’re running your business above board and you won’t avoid tax, as it’s just not worth it to you. 

If you have been in the habit of not charging tax, then today is a good day to quit that habit. 

Contact your accountant or look into your local business Chamber of Commerce or even your local I.R.S. Branch. In Canada, the Canadian Revenue Agency (our IRS) offers free courses to small business owners on how to begin charging tax. It can be a bit of a headache to start, but once you get in the habit, you won’t notice it. One last suggestion: open a separate bank account that you can hook up to your business checking account. Ensure that you have the ability to do online transfers and promise yourself that the tax money you store in that account will be used solely for remitting your tax money. Some people I know use ING Direct or a similar higher interest savings account, which doesn’t add up to much—but 3% is better than nothing. Just DON’T use that money for anything other than the tax you’ll owe. Tell yourself that it’s not your money to begin with and it’s not available to buy that lens or even… gulp… to pay for your In[Focus] ticket.

Stay tuned for Part 2

Andrew Sorlie

Andrew and Emily Sorlie are the owners of Honey & Dear, a successful Toronto, Canada - based wedding cinematography company. They attended their first [In]Focus conference in Austin, Texas in 2010, and it radically changed the direction of their company. With the knowledge and experience they gained, the Sorlies rebranded their now-flourishing business from Sorlie Arts to Honey & Dear. Together, they have filmed more than 80 weddings all over the world including Australia, Dominican Republic, Singapore & Canada.

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