A Fifth Off the First

Dear friend,

The riddle first, as ever. Your century today, and both firms are trying to solve the same difficulty, which is that nobody has bought from them before.

Two firms both want the first-time trade,
Both know a stranger's slow to buy.
One takes a fifth off, plainly stated,
One takes the risk off, and holds the price.
Both fill the month with new-found names.
Whose names came back? And whose did not?

Hold your answer. Story time.

The Story

Two firms in the same trade, and the work, all together now, was equally good. Both wanted more first-time customers, and both understood correctly that a stranger needs a reason to try somebody untested.

The first offered a fifth off the first job, which is the obvious answer and works immediately. The month filled.

What arrived, though, was a particular sort of customer, and it took him three years to see the pattern. They had come for the reduction, since that is what had been advertised, so it was the reduction they valued and the reduction they remembered. When the second job came round at the ordinary rate, it did not feel like the ordinary rate to them. It felt like an increase of a quarter, and several of them said so.

He had also, without meaning to, told every new customer what he thought his work was worth, which was a fifth less than he was asking.

And there was a worse effect underneath. The people most attracted by a fifth off are the people to whom a fifth matters most, which is not the same group as the people who value the work most, and he had built a customer book selected for price sensitivity and then wondered why every conversation was about money.

The second firm held the price and removed the risk instead.

The first job could be a small one, a single room rather than a house, so that a stranger could try her at a size that did not frighten anybody. It came with a plain guarantee: if it is not right, I put it right or you do not pay. And she made the first step easy, so that agreeing did not require a large decision on a Tuesday evening.

The customers who came were the ones who had wanted the work done and had been hesitating over whether she could be trusted with it, which is a different crowd entirely from the ones hesitating over the price.

They paid full rate, so the second job was not an increase. They had chosen her for the work rather than the terms, so that is what they told other people about. And the small first job did what a small first job does: it turned an untested stranger into somebody who had seen her work, which no discount has ever managed.

The Lesson, Since You've Earned It

A stranger hesitates because of risk, not price, and a discount answers the wrong one. The question in a first-time buyer's mind is whether this will work and whether you can be relied upon, and a lower figure does nothing about either. What it does instead is change who turns up, since an offer selects the people it appeals to, and cheapness appeals to those for whom cheapness is the point.

So the useful first-time offer reduces the exposure rather than the fee. Make the first piece small, so the amount at stake is modest. Carry the risk yourself with a plain guarantee, in the seedsman's manner. Or let them try a real fragment of the work, which the trial letter set out at length. Any of the three lets a cautious person begin without your having taught them a lower number.

And note what the discount does that lasts longest, which is to set the price in the customer's mind. Whatever they paid first is what your work costs, and everything after it is an increase to be explained. That is a permanent handicap acquired in exchange for one busy month, and it applies to every customer who came in that way.

Two exceptions, since this is not a rule against ever discounting. A genuine introductory rate can be honest if it is plainly time-limited, explained, and small enough not to reset the anchor: a first visit at cost, say, described as exactly that. And in a trade where the first sale is deliberately loss-making because the second is where the money is, the arithmetic of what you may spend governs, and a discount is simply a form of acquisition cost, which is a different matter from being cheap out of nervousness.

Three questions, and be honest on the second:

1. What are your first-time customers actually worried about? Ask three of them. It is almost never the price, and the specific worry they name is what your offer should be built around.
2. What is your smallest honest job? The version somebody could try without much at stake. If you have not got one, you are asking every stranger to make a large decision about an unknown, which is the real reason your enquiries hesitate.
3. What did your discounted customers do next? Look at whether they returned, at what rate, and what they talked about. If the answer is that they did not come back, you have not been buying customers, you have been renting them.

The Answer to the Riddle

Whose names came back?

The ones who had never been given a lower number to remember. Both firms filled the same month with strangers, and one of them filled it with people who had come for a fifth off and would go elsewhere for a quarter, while the other filled it with people who had been nervous about the work and were no longer nervous. The price was never the thing standing in the doorway. It was simply the only thing one of them knew how to move.

The verse:

Take off a fifth and they will come,
And what they learned is what you're worth.
Take off the risk, and hold your sum,
And they'll come back at the same price.

Until next time. Go and design your smallest honest first job, put a plain guarantee on it, and stop taking a fifth off anything.

P.S. If you have already built a book of discounted customers, do not put them all up at once in a fit of resolve. Raise new customers first, hold the old rates for a season, and let the two meet in the middle over a year. The weaver's four sentences will do the rest of the work when the time comes.

Also in the archive: Let Them Try It, The Weaver's Four Sentences and The Clockmender's Price.