Specials, deals, and other tricky stuff

I saw a funny YouTube ad for a software company running a special, and after I got over the laughing, it made me think about the fact that we haven’t done any sort of special deals, tradeshow specials, or negotiate on our pricing… for a really long time.

Our first two customers got smoking hot deals on our software – because we needed real customers and testimonials, it was worth nearly giving away our software to make sure we had something that could become a product. 

After that, we did a tradeshow special at the first show we attended, where we offered a generous discount (something like 25%, if I remember right) if people bought at the show or shortly after.  It was good to give folks an extra incentive to take a chance on a nearly unproven company and scheduling solution.

But, after that, we stopped doing the specials and deals.  Why?  There was a cost to doing discounts.

1. We want our company to be an open book.  Discounts and deals lead to a sense that you’ve got an adversarial and sometimes underhanded relationship with your customers.  Just go buy a car sometime.
2. Our customers are happiest when they buy software on their timeframe.  If we try to hustle people into buying before they’re ready, they end up with shelfware – software that just sits on the shelf.
3. I’m not a good negotiator.  I’m generally a pushover. If I think too hard about people’s reasons for wanting a bargain, I’d probably end up giving away our software.
4. Eventually, word gets out that you’re creating a false sense of urgency.  We’ve seen companies who offer discounts on a limited-time basis, but it seems that they’ve got to keep doing the specials at every opportunity.  At some point, they’re constantly having a “50% off sale”.

There are legitimate reasons to give discounts early on – if you’re just starting, or trying to prove your concept, your first few customers are most likely going to be beta testers.  But we’re really glad we weaned ourselves from the discount addiction as soon as possible.  We could have probably made more money in the short term, but long term I’m sure it would have hurt us.

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