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Giving discounts because of proximity

Discussion in 'Introduce Yourself to the Community' started by Nearbywork, Oct 30, 2012.

  1. Nearbywork

    Nearbywork Banned
    from Boston
    Messages: 25

    How do you guys feel about giving discounts to two prospects because they're neighbors.

    For instance, if they were going to be $40 jobs a piece, give them incentive to both sign-up and push the price down to, say, $37/each.

    Anyone offer this sort of referral / incentive door-to-door?

    If you'd do this, how far can you keep going, assuming the driveways are close e.g., 1-2 miles or so? Obviously there comes a point where this sort of discount model won't work, but please share your thoughts.

    Just some fun / hypothetical numbers using the $40 benchmark.

    combine 2 neighbors - $37 each
    combine 5 ... $35 each
    combine 10 ... $??
    combine 20 ... $??
  2. linckeil

    linckeil PlowSite.com Addict
    from CT
    Messages: 1,259

    i used to give this theory some consideration, but in the long run, it will contribute to lower and lower prices for the industry. just like the guy that runs an older truck and who doesn't have the big, fat payment to make each month - so he drops his prices a bit because he can.

    in both circumstances the operator may be happy as he is making what he has to to cover his costs and put some money in his pocket.

    but why not put more money in your pocket? i run an older truck that i maintain, so my costs are low. i also have 50 driveways all within no more than 3 miles from each other. but i charge just as much as the guy with the new truck and just as much as the guy who has to drive 10 miles between driveways.

    if you want to give an incentive, thats up to you. if you are trying to grow your business maybe thats a good option. whatever you do, be competitive, but don't give anything away. i work hard on my truck to keep it ready at a moment's notice and i also worked hard to keep a tight route. the reward for this comes in the form of higher profit margins than the guy who has a long drive to make, or the guy who has the big payment to make on his equipment each month.
  3. Nearbywork

    Nearbywork Banned
    from Boston
    Messages: 25

    Having a tight route is the key.

    We shouldn't lower prices for the sake of lowering them or undercutting folks.

    Rather, I'm thinking that would grow demand. In other words, DIYs, who usually wouldn't buy the service, suddenly would ... and the route gets tighter and tighter.
  4. Nearbywork

    Nearbywork Banned
    from Boston
    Messages: 25

    In theory anyway ... if lowering prices for the industry would 100% grow the pie, is there a reason we shouldn't do so?

    After all, it's not price -- it's profit -- we should care about.
  5. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Nope.Everyone stands alone .What happens when one quite? Now your losing money.
  6. Nearbywork

    Nearbywork Banned
    from Boston
    Messages: 25

    Good point. We don't want that. :nod:

    So for my grand plan to work, there would have to be a way to make sure prices hike back up if people quit. Plus we'd have to give everyone on the route a simple/transparent way of understanding that.
  7. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Just don't tell the neighbors what each other are paying. If you insist on giving money away,tell them if you get their money sent to you within 3 days ,you'll take 3 bucks off their next bill.
  8. Mr.Markus

    Mr.Markus PlowSite Fanatic
    Messages: 5,107

    We all like the ones that are close together but I've always let each customer stand alone.I take it all into consideration, do they want grass services in the summer* discount, even monthly payments* discount, prepay*discount. One time service price***full throttle charge.Make each one of them earn their discounts. Another thing to mention to them is that your price already reflects being in the neighbourhood, not how many you have there.(I hope)
  9. greywynd

    greywynd PlowSite.com Addict
    Messages: 1,339

    Another option is a discount for a referral....and make it a one time, small discount. Say $5 off a plow for a referral that results in a sale.