Three years ago, the party rental industry couldn't discount rates fast enough.

Whipsawed by a floundering economy and plenty of competitors willing to shave their own rates, nearly two in three rental operators told Special Events back in 2010 that they felt compelled to discount just to get business in the door. But things have changed. Due to factors including an improving economy, the latest Special Events online survey reveals that only 20 percent of rental operators today say that they discount rates much more than they wish to. Instead, 40 percent now say they discount rates selectively as they see fit. And other 40 percent say they rarely if ever discount now. Indeed, discounting is now again being used as a strategic tool rather than an everyday deal, a scalpel rather than a sledgehammer.

ASK THE QUESTIONS The team at All Occasions Party Rentals, based in Knoxville, Tenn., considers a range of issues before offering a discount. "We discount based on several factors," notes president Terry Turner. "How bad do we want the business? Is it a strategic move to capture a market? Does it provide exposure to a certain demographic we are looking for?"

At Landover, Md.-based Perfect Settings, longtime customers are rewarded with discounts while newer ones don't get as much "unless they are a volume client," explains founder Peter Grazzini. The improving economy helped him pull back on discounting, as well as the fact that "my competition quit doing it so much," he says. In fact, "I got a small price increase this year," he says.

"We offer a discount to our highest volume, repeat caterers, and if we know we are in a bidding situation, will also sharpen our pencils," says Charlie Feldbaum, head of Minneapolis-based Apres Party and Tent Rental. "But economic times are must better and the end customer is much more willing to take our bid and not look further."

Sparks, Nev.-based Camelot Party Rentals sticks to a budget for its discounts. "We still do give discounts, but now we budget per month," notes Kimberly Beck, who heads up PR and marketing. "We know when the big annual events occur and we factor those into our budget first, while everything else follows. If we exceed our monthly discounting budget, then we don’t provide any more discounts for that month."

WHO'S SORRY NOW? A big-city rental operator who asks to remain anonymous because "all our largest customers read Special Events" says the improving economy allowed his company to discount much less, reserving that option only on occasion for the slow winter months. Another helpful factor: Some clients have been alienated by the poor service they received from a deep-discount competitor. "I tell our sales people that sometimes it is better to let a customer use a competitor who offers a ridiculously low price," he says. "In most cases the customer is disappointed in what they receive, and in the end they appreciate our company more and realize that we have been treating them very well."

THE FABULOUS FREEBIE To hold the line on rates, several operators throw in a complimentary item rather than a discount on the entire tab ...

See the full story in the September-October issue of Special Events, which is available to ISES members for free and to subscribers. Not a subscriber? We can fix that; just click here.