Hi Don, and welcome to the list. I agree generally. Discounts are a slippery slope. There are exceptions, however. I discount per piano tuning fees to institutional customers (universities mostly) where I take care of a lot of pianos and can schedule multiple tunings in one day. When they call me to do a single tuning that is not part of the scheduled routine, however, they are charged my normal rate. I also offer modest discounts to the trade to encourage them to subcontract me for work they cannot otherwise perform. The important part here is that you don't want the contracting tech to be able to offer your work for less than you do. So I allow enough of a discount that the tech can make some money on the deal, but not enough that they can offer my work to the customer for less than I would. I also offer a slight discount on the second piano tuning fee for retail customers who have more than one piano. Sometimes handling requests for discounts can be awkward though. Recently, I gave an estimate for an action rebuilding job to a new customer. They called to ask me if I would discount my fee because they had received another bid that was slightly lower. I told them that I really didn't engage in competitive bidding, that my fee included a number of steps and procedures that I felt were necessary to deliver a high performance action and the use of parts of a certain high level of quality. I went on to explain that if they needed the job done for less I would either have to compromise on the quality of the parts or omit some of the procedures I thought necessary to do the best job. I said that though I was willing to consider such options in order to reduce the price, it would not be my preference or recommendation. I picked up the action yesterday (at the originally quoted price). David Love davidlovepianos@earthlink.net > [Original Message] > From: donald <donspiano@earthlink.net> > To: <davidlovepianos@earthlink.net>; Pianotech <pianotech@ptg.org> > Cc: <donspiano@earthlink.net> > Date: 1/31/2004 8:19:05 AM > Subject: Re: Deductibility > > Hello David, Im New to your list, I am (100%) against discounts, This > is a professional business, Many times i have been asked if i am a > brain surgeon because of my prices, I have had only one call back in 32 > years of servicing and tuning, and that was for a tool the customer > found and was going to keep it and had a change of heart, Doctors, > Lawyers, Telephone Cos, Electrical, cell phones, All professional > businesses do not DISCOUNT, If you give 100% to the customer, You > will get back 100% and more, enjoy your postings, Dons piano Donald > Lemoine > > > On Jan 31, 2004, at 1:37 AM, David Love wrote: > > > I do see where you are coming from now. I read the initial inquiry > > as > > whether or not one could write the discount off of one's gross income > > (monies actually received). Your method is a different accounting > > method > > than the one I use, but I think we agree that the bottom line is a > > wash. > >> From a practical standpoint, most technicians keep track of income by > > keeping a record of checks received and deposited with taxable portions > > separated out when applicable. The returns and allowances portion of > > my > > return is generally blank as I just don't give refunds on tunings or > > repairs. Though I see the advantage of a more complete financial > > picture > > if one is prone to giving discounts, I wanted to make the point that > > individuals should not make the mistake of thinking they could write up > > each sale as a 10% discount and think that they would save 10% on their > > taxes. > > > > David Love > > davidlovepianos@earthlink.net > > > > > >> [Original Message] > >> From: Arlin Hall <ahall12@austin.rr.com> > >> To: <pianotech@ptg.org> > >> Date: 1/30/2004 9:49:07 PM > >> Subject: Deductibility > >> > >> David, > >> > >> You still don't see where I am coming from. (And, by the way, I am a > > CPA). > >> > >> Business allow discounts all the time. Whether its a quantity > >> discount, > > or > >> a frequent customer discount, or a discount or allowance to satisfy a > >> complaining customer, or whatever. And they record those discounts to > > know > >> how much it is accumulating to. > >> > >> The IRS fully recognizes this and allows for it on Schedule C Part 1 > >> Line > > 2, > >> "Returns and Allowances" (Allowances = Discounts). Just like any > >> other > > item > >> of income or expense you need proper documentation - receipts and > > invoices, > >> for example. Your invoice shows a charge of $75, a discount of $10 > >> and a > >> net of $65. And, it just so happens that you also have a check from > >> the > >> dealer for $65. No Fraud, No Over or Under reporting of income. Just > > more > >> complete records. > >> > >> You certainly would want to know how many $10 checks you had written > >> to > >> people for referrals. Why wouldn't you want to know how much in > >> discounts > >> from your regular prices you had allowed? > >> > >> In both of my examples the starting place was $75 from a regular price > > list. > >> Not ficticious funny money that was then donated or written off. The > >> $10 > >> discount was never intended to come off the $65 price actually paid. > >> I > >> agree that that would be tax fraud. It would be taken from the $75 > > regular > >> price. As shown in my last post, 75 - 10 = 65. On my financial > > statements, > >> it would include the gross revenue of $75 less the discount of $10 > >> with > > net > >> revenue of $65. It would be important to me as a businessman to know > >> how > >> much in discounts (and referrals) had been given in a year. And of > > course, > >> the income reported to the IRS would reflect that amount actually > > received. > >> > >> Arlin Hall > >> > >> ------------------- > >> > >> David Love worte: > >> > >> Just to clarify. In one scenario you receive $75.00, write a > >> referral > > fee > >> check for $10.00. When it comes time to pay your taxes you declare > >> $75.00 > >> worth of income and have a deduction of $10.00. > >> > >> In the other scenario, you write an invoice for $75.00. You receive > > $65.00 > >> because you gave a discount. When it comes time to pay your taxes you > >> declare $65.00 worth of income (because that's what you received, no > > matter > >> what the invoice says) and deduct $10.00 for a discount given? > >> > >> If that's what you meant, it doesn't work that way. > >> > >> If it is to your advantage for some reason to write the invoice as > >> $75.00 > >> with a $10.00 discount given then that's fine. But when it comes > >> time to > >> do your taxes, you should only declare the money your received as the > >> discount will not be accepted. If you are audited and the discount is > >> thrown out, you will then have to explain that you did not, in fact > > receive > >> $75.00, but only $65.00. That would put you in the rare position of > >> someone who declares more income than they actually received. You > >> run the > >> risk of the IRS not believing you. > >> > >> David Love > >> davidlovepianos@earthlink.net > >> > >> _______________________________________________ > >> pianotech list info: https://www.moypiano.com/resources/#archives > > > > > > > > _______________________________________________ > > pianotech list info: https://www.moypiano.com/resources/#archives > >
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