The dangerous world of discounting!
DISCOUNT - a deduction from the usual cost of something.
To get new customers or clients on board discounting the price may seem like a great idea, but in reality it is a really easy way to lose money quickly.
Here are 4 reasons to consider next time you think about offering a discount:
1. Discounting eats away at your profit margins.
2. Discounting can affect the customer’s perception of the value of your product or service – the less they pay, quite likely the less the customer will value it.
3. Once you have discounted then there is an expectation of discounting any future purchases and if they tell their friends, they may also expect discounts as well.
4. Let the customer know why you are different than your opposition instead of offering a discount as first resort to get someone across the line. Depending on your business, try offer additional services like a longer guarantee period or an added product or accessory or free shipping.
Of course, there are some valid reasons to discount, such as liquidating obsolete stock or to meet cash flow requirements. But next time you spur of the moment decide to offer a customer a discount to get them across the line, remind yourself of the points we just discussed to ensure you aren’t doing it thoughtlessly and that it won’t have implications for your business going forward.