Does Black Friday make sense for a service business?

At the end of November, inboxes fill up with discounts and many owners of service businesses wonder whether to join in. The honest answer is: it depends. It depends on margin, on how you sell and on what you want your service to be worth in the minds of those who buy it.

Why a discount weighs more on a service

• Time is the stock. Every hour sold at a low price is an hour you do not sell at the normal price.
• The price says something about the service. A big cut can make the previous price look inflated.
• It attracts people looking for the price, who tend to be the ones who stay least after the discount.
• It cannibalises customers who would have bought anyway. Those who were going to book start waiting for the promotion.

When it can make sense

• To fill a quiet period, if you have free capacity and the margin can take it.
• To introduce a new service to people who already know you.
• To reward current customers, with a condition reserved for them.
• To sell in advance, such as session packs or bookings for the start of the year.

Alternatives that do not touch the price

1. Add value instead of cutting price. An extra assessment, a follow-up session, faster delivery.
2. Limited places. "Bookings open for January: few places left." If it is true, the scarcity is real.
3. Gift vouchers. For people who want to give your service at Christmas, without lowering its value.
4. Early booking. Special terms for whoever books next year now.
5. An offer with a local partner, with a condition both reserve for their own customers.

If you decide to go ahead

• Set the limit of places and the end date before announcing.
• Write the conditions in plain language: what it includes, for whom, until when.
• The rules on advertising discounts need care, for example in how the previous price is shown. Check them before publishing.
• Explain why. A promotion with no reason invites suspicion.
• Reply quickly: whoever takes up a promotion expects an answer the same day.

Afterwards, measure

Count how many new customers came, how many were already yours and how much margin was left. Ask whether they came back to buy at the normal price. Only then can you tell whether it was worth it. If you are thinking of ads for the campaign, first read how to decide how much to invest. And in Digital Marketing, a campaign only enters the plan once it is clear what it should change.

The sum before deciding

Write in three lines: how much margin a normal sale leaves you; how much would be left with the discount you are thinking of giving; and how many extra sales you need to make to end up the same. Then ask yourself honestly whether it is likely you can make those extra sales, and whether you are not giving the discount to people who were going to buy anyway. If the sum only closes with very optimistic results, the alternative without a discount has a better starting point. Also write what you would do if you did not run the promotion: carry on as you are, or make an offer with added value. Compare the two alternatives on margin and effort before deciding.

In short

• In a service, the stock is time, and a discount devalues it faster than in a product.
• It makes sense to fill quiet periods, introduce a new service or reward current customers.
• There are alternatives without a discount: added value, limited places, gift vouchers and early booking.
• Do the margin sum before announcing and measure afterwards.

Quick questions

If competitors discount, do I have to?

No. If your service is worth what it offers, entering a price war rarely pays off. Think instead of an offer only you can make.

How big should the discount be?

There is no right percentage. It depends on your margin and what you can sustain. Do the sum and set a limit you will not go below.

Can I make the offer only to current customers?

You can, and it is a good way to test it. Communicate it by email or message to those who already know you, without announcing it to everyone.