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Old 4th Aug 2010, 09:08
  #27 (permalink)  
24Carrot
 
Join Date: Jan 2008
Location: London UK
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Offering discounts doesn't have to be a sign of a desperate cash shortage.

Loads of businesses do it to get revenues up. They tend to have high fixed costs, fixed output capacity, high costs per transaction, and some seasonal variation in demand. For example railways have season tickets, advanced payment tickets, off-peak tickets, etc. I think the fancy name is stratified pricing. Essentially it is a more or less elegant way of charging different people different prices for the same product.

Obviously, if the business model is bulk buying at 100, and bulk selling at 101, then offering a 25% discount would suggest concerns over meeting the next wage bill.

I have no experience of flying school economics, but I suspect (despite their best efforts to lease aircraft and even FI's by the flying hour), that they do have significant fixed costs, eg premises and aircraft parking. There are only so many aircraft hours they can sell, so their sales capacity is also limited. I don't know how credit card payment fees work, but processing each payment while the customer waits is a hassle, and some people will surely 'forget' to bring their card and they get credit anyway, etc. And 'nice' flying weather tends to be seasonal too!

So I think a solvent flying school can sensibly offer discounts for reasons that have nothing to do with funding.
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