Why you shouldn’t discount your psychology and therapy services (and when I do)

The Business of Psychology

Why you shouldn’t discount your psychology and therapy services (and when I do)

Hello and welcome to The Business of Psychology Podcast.

Today I am talking discounting; the reasons you might want to do it, reasons it can be a pretty dangerous game, and the reason that I am doing it for the first time in a few years!

Full show notes of this episode are available at The Business of Psychology

Links & References:

Episode 109: Ethical marketing in private practice. Scarcity, should we use it?

The Psychology of Discounts: 8 Researched-Backed Strategies for 2022 (Namogoo.com)

Start & Grow: The Complete Course for Psychologists and Therapists - Psychology Business School

Rosie on Instagram:

@rosiegilderthorp

@thepregnancypsychologist

Let's start with some behavioural science and the reasons we might want to discount.

Reasons to discount

• There is some evidence that discounting can give people a rush of oxytocin when they feel that they've had a good deal and actually that the excitement can last and promote better engagement with a product or service.
• There's evidence that 70% of millennials look for a discount before purchasing, and it might be the deciding factor in whether they go ahead.
• For lower cost items, there is also some evidence that it can increase the perception of value and quality. The “I only paid 20 pounds, but it's worth 50 pounds, so I love it even more” effect, or as I like to call it, the “Vinted” effect.
• It can drive that sense of scarcity and urgency if it's time limited, which means that people who are sitting on the fence or who wouldn't ordinarily make a purchase do so, and that can have ethical problems. You heard me talking about that in the scarcity episode of this podcast. It can be a good thing too, especially if you've got a product that people tend to procrastinate about buying and you want to help nudge them to make a decision that they would've made eventually anyway, but they might have put off for a while.

None of those, you might have noticed, really apply to therapy services because we are not in the low cost bracket, and we're a service that people need to access when the time is right for them, not when a special offer is running. However, sometimes there are other unique reasons that we might want to consider using a discount for a therapy service specifically.

A Bridge to Price Increases

For example, we might want to use a discount in a therapy service as a bridge if we have to make a big price increase, and we know that our current clients might struggle with that. For example, and I'm sorry to say that this might apply to quite a lot of us at the moment, if your room rental has gone up by 20% and so have your energy bills, you might want to take a staged approach to passing that onto clients and discounting can help you to do that. If you've had to make a really difficult decision, like a significant fee increase, because your overheads have increased, it can help soften the blow for existing clients if you're able to do that.

Early Bird Discounts

Another reason to discount is if you want a flurry of people to join something that you are doing for another good reason. Because of that urgency effect, discounts can be really good at driving a whole bunch of people to make a decision to buy from you at the same time or in a small window. This can be really helpful if you want to incentivise early booking for a good reason. For example, people often offer an early bird discount on events, and that's actually because they can then use the money from the early bird sales to pay for the upfront costs of running the event. It can really help with cash flow, and it means that they can safely invest in things that are going to make the event better for everybody.

It might also be that you offer an early bird discount in the hope you'll fill up spaces on something like a group program early, and that makes a better group experience for everybody because it means you've got more time to plan, think about group dynamics, make sure that if you're doing it in person you've rented the correct size space, that kind of thing. If all of those sales trickle in and you don't really know when they're going to happen right the way up to the deadline, then it can be a lot more

Or it could be that you've invested in something new and you might want to use an early bird discount to try and recoup some of those costs as quickly as possible. So having it as part of your tactics for a launch of something like an online course (for example) might mean that you are safely able to invest in more stuff that makes that course better, and that can be a really good reason for doing it. As long as you've weighed up those ethical concerns that we've spoken about.

If you want more detail and references to the studies that have shown any of those effects that I've spoken about, have a look at the Namagoo blog. I really like it. I think it's really, really interesting and it talks about the neuromarketing and behavioural science behind all of those concepts.

If you are selling an online course or another product as part of your practice, especially a lower cost one, you might be tempted by some of those reasons to discount, and as we talked about in the scarcity marketing podcast, I think that there are some real reasons not to do it. There are careful ethical considerations we need to make when we are considering discounts as urgency and scarcity driving tactics. In particular, you really need to consider whether people's nervous systems are in the right place for it, or if it could tip them into making a decision that they end up regretting amongst other issues that we talk about in the podcast episode.

I actually do it very rarely with my courses. If you've been on my email list for a while, you might have noticed that the last discount I offered was years ago, and that's because it can be very damaging. So I'm going to tell you now about some of the reasons why it can be a bad idea, and then I'll explain why I'm, in fact, offering a discount at the moment (until September the 22nd 2023) for the first time in a long

Reasons not to discount

It can really damage the perceived value of your service

This can be explained through the behavioural science concepts that we talked about in the last series, like price anchoring, framing, and scarcity.

Other services can become a price anchor

If you are half the price of the private psychiatrist they saw, they're going to perceive you as half the value.

Your previous price might serve as an anchor

If they know you usually charge £150 but you discount to £100 a session, just for them, perhaps they might perceive that you are not doing very well in business and you're effectively trying to get rid of all your slots. Think about if you go into a high-end fashion store; maybe if I go into French Connection and their jeans are normally something like £120, way out of my price range, but I see that they've got a discount rail and on the discount rail I can get some of their jeans for £30. Do I think that that's a good deal? Or do I think that those jeans are on the discount rail because there's something wrong with them? Maybe they've gone out of style, they're not as fashionable as they used to be. That's the risk you're taking when you discount your therapy service.

Some people might just be grateful and they might think, “Wow, they could have sold this space at £150, but they've given it to me for £100, what a great person”, but actually what the studies tell us is that the majority of people will just think that you can't sell your your spaces for £150, and so you are discounting it out of desperation. Basically they'll perceive your services as less scarce and therefore less valuable as they believe you're desperate for clients, or at least not very busy. You can see the scarcity episode for a bit more detail on that.

Framing

If you discount your service, then you might be framed as similar to low value services that they use in the rest of their life that they might take a more casual approach to than the approach you want them to take to your therapy practice.

This can impact on engagement and the actual success of your therapy. For example, somebody might see your offer in a similar way to the way they see the regular appointment that they have with a nail technician. And that same person might quite flippantly cancel a nail appointment, but they wouldn't cancel a meeting with their lawyer. You've got to, when you're considering your price, consider what you want your price to say about your service and where you want it to be positioned in the mind of your client. Do you want them to perceive you as similar to their nail technician who they can phone up on the day and cancel? Or do you want to be seen as a professional service like a lawyer that you wouldn't dream of cancelling, or if you did, you'd expect to pay the full fee? I know it's not always comfortable to think in that way, and it may be that in your mind you're somewhere in between, but you really do need to be thoughtful about it because there is a ton of evidence that this is what happens in our minds when we see the price of a service.

It will damage your profit margin

The final reason not to discount, and this applies to everybody, whether you are offering an online course, a physical product, or your therapy services, is that it will damage your profit margin. Pricing is an art and a science, and it actually used to belong to marketing departments because it really is quite a technical thing to figure out properly.

You set your price where it needs to be to generate the income you need to make and to communicate the correct message of value to your potential clients. Eroding that in order to make sales can very quickly turn a profitable product into a loss making one. If you discount regularly, it is very likely that people will wait for the next discount to arrive in their inboxes, and you will never sell at full price again. If the price you normally charge is the price that you actually want people to pay, because that's where you're going to make enough profit to be sustainable in your business, discounting can very quickly put you out of business. A business you might want to look at for an example of this is The Gap, as they call them in America, or Gap as we call them here. They've really fallen into this trap in a big way because for a long time, they were offering 40% discount codes to people on their mailing list, and I for one, know I never bought anything at full price for years because I would just sit there and wait for the next 40% offer to land in my basket. So if their profit margins were set at the full price, they probably weren't achieving that at all for years. So think about your own behaviour and it usually provides the evidence that we need to believe this behavioural science stuff.

Do go and check out the Namagoo blog or you can have a look at the scarcity marketing podcast that I did for a little bit of more evidence about that.

Why have I decided to offer a discount now?

Over the past few months, I have made some major investments into my new program Start and Grow. I've decided to change Psychology Business School; instead of one membership for everyone at every stage, which is what we've been doing for the past year, we are now going to have two separate courses plus an alumni membership for people who've trained with us in the past. Start and Grow is the first one of those flagship courses.

Start and Grow is our complete online course with videos and workbooks. Taking you through setting up your practice, getting your first clients with confidence, and building a sustainable, financially secure, fulfilling, and rewarding practice for now and for the future.

Alongside the course you also get:

• Legal templates drafted by a UK lawyer covering all aspects of your business so you can stop worrying about GDPR and start helping people.
• Group coaching calls with me to guide you through any barriers
• Monthly peer supervision so we can tackle the sticky ethical issues that arise in business together
• Deep dive expert training in subjects like setting your fees so you can reach your goals in new and exciting ways.
• The perfect processes bundle with templates and clear processes for you to follow to maximise your efficiency from day one (we all need to reclaim some time back don’t we!)
• Our private students podcast so you can learn flexibility at a time and place that suits you
• Our supportive student’s community

The community has always been a major selling point of my courses and the membership, and it is not changing. What we have done though, is upgrade the community; we're now in a fancy new Kajabi community where I'm able to get in there and respond to your queries a lot quicker and more effectively, and we're able to have more exciting discussions around particular topics, book recommendations, and giving each other feedback on the important stuff that you're working on in your business too.

To create this new shiny course, I've taken the Start and Grow roadmap from the old Psychology Business School membership, updated it with all the latest insights and trends, carved it up into smaller and more digestible lessons, and re-recorded every last word.

Feedback from my students has always been incredible, but I have noticed how much harder it is to make time for learning now than it was when we started out in 2020, so I've revamped everything with that in mind to make it all as easy to use as possible, and I've put it all inside a really simple to use platform that I really love.

Now, as you can probably guess, it has not been cheap to re-record everything, create a private podcast, buy a shiny new platform, and set up an awesome new community, so the discount that I'm offering at the moment is in large part, an attempt to recoup some of those costs more quickly than my standard marketing efforts usually do.

Also in the name of transparency, I really want to give a little nudge to anyone that might have been wanting to dive in but sitting on the uncomfortable private practice fence for a while. I know that sometimes getting a discount is the thing that makes the investment feel possible and, as I'm really confident that this is a good investment (I've had more than 200 psychologists and therapists go through the less shiny version of this material before and tell me that it was a good investment) I think it's ethical to give a little nudge. And it is little. The doors to the course aren't closing. It's important to me that we are here whenever you need us, so I'm not closing the doors. But for those who know the time is right, but might be feeling a bit anxious about it, I hope this is just going to be a gentle push in the right direction.

Do I worry about the ethics? Of course I do. All the time. but I trust that my audience for this course, which is you guys, psychologists and therapists, have the resources to be able to unsubscribe or ignore the emails if the time isn't right for you. So I feel good about it in this case.

Do I worry about damaging my brand? Not really, because I know that I'm not going to do this again for ages. This isn't going to become the norm for me.

I'll finish up by saying that if you know the time is right for you to build a practice with financial security, a steady stream of referrals that is fulfilling and impactful, then there will never be a better time to sign up for Start and Grow. I don't know when the next discount is going to be, but for the reasons I've given here today, it is likely I won't be doing it for a very long time! So I hope I'll see some of you in there soon.

Mentioned in this episode:

Start and Grow

Before you go, did you know that I have a course for professionals just like you who are starting out in independent practice? In fact, my Start and Grow course has already supported hundreds of psychologists and therapists to build impactful, financially rewarding, and professionally fulfilling practices. When you sign up to the course, you get clear step-by-step support to build a practice that supports your values and rewards your hard work through our comprehensive online learning modules. You get peace of mind, thanks to our complete suite of legal documents from Clare Veal at Aubergine Legal, you get 12 months of membership to our supportive student community, access to our private students' podcast, so you can learn in your own time and in your own way. You, yes, I see you learning while you're doing the washing up! And you get access to regular group coaching sessions with me and the rest of our lovely students. If that sounds like exactly what you need to get out of private practice paralysis, then sign up today at https://psychologybusinessschool.com/psychology-business-school/