Discount Strategies and Client Relations in Entertainment Business

Analyzing Discount Calculation Variables

Let’s analyze how we calculate a discount, considering several variables: (I) Inventory, which includes our balloon supplies and associated items. In this example, (L) labor stands for the entertainer, and (K) refers to kids, but it actually includes anyone receiving a balloon animal. Lastly, (nJ) represents multiple jobs contracted by a client for various events like school functions, park events, libraries, or annual birthday parties. Typically, these jobs are booked at one time.

I+L+K+nJ = Discount

If we apply this formula, only one variable can initiate a discount: the number of jobs. Inventory usage is relatively minimal, as most events utilize only 0.01% of our inventory per gig. Purchasing more balloons to qualify for a discount does not have a significant enough impact to warrant offering a discount to the client.

Topic Summary – Discount Variables

Discount calculation in this context involves considering multiple variables: Inventory (I), Labor (L), Kids (K), and multiple contracted jobs (nJ), represented by the formula I+L+K+nJ = Discount. However, the analysis suggests that only the variable of the number of jobs (nJ) can trigger a discount. Inventory usage has a minimal impact, with most events utilizing only 0.01% of the inventory per gig. Purchasing more balloons for a potential discount doesn’t have a significant impact, making it less likely to warrant offering a discount to the client.

Why Discounts Should Depend on the Number of Jobs

Labor is a fixed price. If you decrease the labor cost while the number of kids increases, you are understaffed for the event, leading to long lines of unhappy guests and a stressed-out entertainer.

An increase in the number of kids or attendees doesn’t warrant a discount as more staff, inventory, and hours are required to fulfill the entertainment needs.

Balancing Balloon Designs and Cost Efficiency

An argument could be made to streamline the balloon designs and create simpler line-twisting balloons, reaching a larger audience. More balloons can be produced by narrowing down the options, necessitating fewer skilled entertainers. This is evident at school or community events where a balloon entertainer is hired, but volunteer staff or children are engaged in face painting. Here lies an opportunity to provide a client with a discount.

Veteran Entertainers and Cost Considerations

The downside to this argument is that a veteran entertainer, skilled at delivering an engaging and professional presentation, may be more efficient and entertaining but will demand a higher fee.

Providing a discount based on the number of jobs is the most feasible option for offering a client a discount, as it reduces labor costs. Here’s why.

Long-Term Client Retention Through Smart Discounting

Suppose a client contracts you for three events, each lasting three hours, with two entertainers booked for each event, guaranteeing twelve hours of work. There is no marketing, quoting, adjusting times or dates, or negotiating back and forth. At that moment, a five to ten percent discount may seem inconsequential in the long term. However, the goodwill established with the client is priceless, and based on my experience, that client will likely remember you when booking or recommending your entertainment for the following year.

Allow me to share some advice I received from my mother during my early days in the entertainment business. She overheard me negotiating a price for a gig with a client. “The first hour is $125; all hours afterward are $100 each.” My mother suggested, “So, if I heard you correctly if I hire you for 4 hours, the cost is $425. What if you offered them a 10% discount on your $125 rate? They would save $50, and you would make more per hour.”

That was the day I realized that offering a percentage discount is better than a dollar discount, especially when dealing with multi-hour gigs. The percentage discount can range from 1 to 10 percent, and based on my experience, clients are generally happy with it. From an entertainer’s perspective, losing 1-10% is negligible when securing three three-hour gigs. The discount doesn’t have to be substantial, but it should be offered in percentage and not a dollar amount.

Topic Summary – Long-Term Client Retention 

In the entertainment business, establishing goodwill with clients is invaluable. Offering a 5 to 10 percent discount may seem minor initially, especially for multi-hour gigs with fixed rates, but it fosters a positive client relationship. This approach, endorsed by personal experience and advice from my mother, who suggested a percentage discount over a dollar amount, proves effective. Clients appreciate the flexibility, and entertainers, in turn, benefit from maintaining a positive rapport for future bookings and recommendations.

Challenges of Quantity Discounts

So the question is, when should we discount?

School Kids with balloons

As I discussed in my previous blog post, it is hard to discount based on quantity. Henry Ford increased production and made cars cheaply, achieved only with a large workforce. A balloon entertainer could offer a client a discount for having more entertainers, thus reducing the amount of work for the entertainer. However, hiring additional entertainers is impossible if the negotiated price is too low. I’ve experienced this with entertainers who lock down a contract price with a client. They are expanding their operation nationwide and require 50 more entertainers. The next thing you know, you get a call from a stranger saying they’re a colleague and asking you to work at subpar rates.

Smart Discounting Without Compromising Value

A quantity discount is what I consider a volume-based approach, particularly beneficial for B2B businesses. I employed this strategy early in my career when I lacked good marketing skills and a small network to generate business. I would work with an agent as an independent contractor and would adjust my rates based on the quantity of work assigned. If the agent didn’t provide steady work, my rates would revert to normal—the more work given, the better the discount.

Loyalty Discounts for Repeat Clients

Loyalty discounts are ideal for clients who book year after year—our returning customers. These could be the birthday moms, park departments, or community events that consistently book annually. Once I establish a price with such individuals, I commit to honoring that rate for all their events and even consider reducing it for smaller budgets. This slight compromise creates a win-win situation for both parties.

Topic Summary – Discounts

The discussion addresses challenges in offering quantity discounts for balloon entertainers. It questions when to provide discounts based on volume, emphasizing the risk of negotiating low rates when hiring additional entertainers. The concept of smart discounting for B2B businesses is introduced, suggesting rate adjustments based on assigned work quantity. Loyalty discounts for repeat clients, like birthday moms or community events, are proposed, emphasizing the importance of establishing consistent rates and considering reductions for smaller budgets to create mutual benefit.

Price Freeze as a Loyalty Incentive

Loyalty discounts may involve a price freeze. A few years back, I faced a situation where I needed to raise the rate for a client who questioned the increase. I clarified that I hadn’t adjusted prices in five years and needed to do so to keep up with inflation and rising business costs. The client agreed to the new rate when I explained it was an 8% increase, which was still more cost-effective than my current rate. This arrangement proved a win-win: the client retained its loyalty discount, and my price adjustment allowed me to pay the entertainers more, ensuring profitability while maintaining the account.

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Discount Strategies and Client Relations in Entertainment Business
Article Name
Discount Strategies and Client Relations in Entertainment Business
Dive into the world of entertainment business with Dale Obrochta as he breaks down the intricacies of discount strategies and client relations. Uncover the formula behind calculating discounts based on inventory, labor, kids (K), and contracted jobs (nJ). Discover why the number of jobs is a key factor in offering discounts, balancing balloon designs for cost efficiency, and the considerations for veteran entertainers. Explore the smart approach to long-term client retention through strategic discounting and gain insights from Dale's early lessons in negotiation. Learn about the challenges of quantity discounts and when to employ loyalty discounts for repeat clients. Discover the power of price freezes as a loyalty incentive and how these strategies can elevate your entertainment business. Join the conversation on optimizing discounts without compromising value and discover the winning strategies that ensure both profitability and client satisfaction. Whether you're an aspiring entertainer or a seasoned veteran, this article provides valuable insights for navigating the complex terrain of the entertainment business.
Publisher Name
DEO Consulting, Inc AKA Magical Balloon-dude Dale

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