Discounts and scholarship memberships are a cost, even though no money leaves your account. Record them on their own line in your books, so you can see what they cost each month and decide which ones are worth keeping.
Why it's easy to miss
A discount doesn't show up as an expense. Your platform charges less, the deposit is smaller, and the gap disappears. Over a year, a handful of small discounts can add up to a lot of revenue you chose not to collect.
See what they cost
In a made-up example, 20 members get 20% off an $80 membership. That's $16 each, or $320 a month, or $3,840 a year. That might be a good trade for loyalty or referrals, but you should know the number.
How I'd record them
I'd record each membership at its full price and the discount on its own line right below revenue. Your P&L then shows what members would have paid, what you gave back and what you kept.
If your platform only reports what members paid, ask your bookkeeper to pull a monthly discount report from it, so the discount line stays accurate.
Scholarship and free memberships
A free membership brings in no revenue, so there's nothing to record as income. I'd still keep a list of who has one, when it started and when you'll review it. That count belongs in your monthly numbers, because those members use your time and supplies.
Free care generally isn't a donation you can deduct. If someone asks, send them to your CPA.
Set rules before you need them
- Which discounts you offer, and who qualifies.
- Who can approve a discount or a scholarship.
- When each one gets reviewed.
Without written rules, discounts tend to grow quietly, and staff end up making pricing decisions case by case.
Check the effect on pricing
Discounts lower your real revenue per member. If you're thinking about a price change, use the number after discounts, not your list price.
Promotions are discounts too
A first month free, a waived enrollment fee or a holiday price are all discounts. Record them the same way, on the discount line, and note which promotion each one came from. Then you can check whether members who joined on a promotion stayed as long as members who paid full price.
What I'd do this week
- List every member with a discount or a free membership.
- Add up what they cost per month.
- Ask your bookkeeper to put discounts on their own line.
- Write down who can approve them and when you'll review the list.
Common questions
Are family discounts the same thing?
They're a pricing choice, but I'd still track them. It shows you what a family membership brings in compared with separate ones.
Should staff memberships be free?
That's your call. If you offer them, keep them on the list, and ask your CPA whether they count as a taxable benefit.
How often should I review discounts?
Once or twice a year is enough for most practices, and any time you change prices.
Want to see what your discounts cost?
We reconcile every account every month and send your P&L and Balance Sheet by the 15th, so decisions like this start from real numbers. If that's what you need, apply to work with us.