Should you discount?
This question comes up time and time again, and the answer is… it depends, but probably not! Here’s why, and what you could do instead.
Some businesses do well offering regular discounted products and having sales – Primark and Poundland are great examples of businesses that have built their model around affordability and budget. But, unless your company values are forged around affordability then you are probably much better avoiding discounting. I’ll explain…
If your business values are based on making things affordable, then price is hugely important, to you and to your customers, so all good.
But, what if your business values something else such as exclusivity, quality, sustainability, made by hand, reusability, or vegan friendly attributes, for example. In these cases, your marketing should focus on attracting customers that share these values.
Customers that choose to buy handmade items, for example, are almost always prepared to pay more. They don’t prioritise price in their decision making, instead they might look at exclusivity, customisability or the story behind the ingredients. Customers that shop on price will not see the value in your handmade stuff, so stop trying to attract them with price deals.
Businesses that regularly offer sales risk devaluing their products or services. If you don’t believe me, let me ask you one question… Would you pay full price for a sofa in DFS? Of course not, that’s madness, DFS always have a sale on. Except they don’t, it just feels like they do. Imagine how you would feel walking into DFS on a non-sale day?
But if you must…
If you really want to, you could temporarily discount your prices in honour of a special occasion!
Offering anniversary sales, or sales to celebrate local festivals, events, the birth of a child, or fun days, is ok from time to time. Maybe you produce honey and are celebrating Whinney the Pooh’s birthday, or you make wedding dresses and are offering a sale to celebrate a royal wedding! These types of sale feel special and enticing, will not devalue your products, and if done well, are good for your businesses general reputation too.
But, you will want any discount you offer to actually change your customers behaviour. Research suggests that in order to be effective, a discount should be more than 10%. Anything less than that and you are just selling the same stuff to the people, but for less money!
If it specifically benefits you, then discounting can be used as a sales tool – but only if the client asks for it, and only if you think it will change the outcome of the conversation. For example, if the customer would normally pay for your service on invoice or make payments, you could offer a discount in exchange for them confirming and paying now, in full. This could benefit you hugely if you spend a lot of time chasing late payments, or your cash flow is a little dicey!
Definitely don’t give a discount just because…
If you mostly sell your time, it can be tempting to think you should offer a discount to a client that wants to book lots of your time at once. But, surly that’s just giving yourself a long term pay cut?
You think they won’t pay your price. Instead, spend some time learning the value of your product and your time, and realise you deserve to get paid for it. I know a photographer that barely took a breathe between saying her price and offering a discount. But, it really undermines the quality of your service. Remember the window salesmen from the 90’s?
Add value instead!
For the best results, try adding value to the deal instead of reducing the price. Maybe you could throw in free delivery, upgrade your client to a rush service, offer customisation, add 20% extra stuff, or create a product bundle just for them.
Learn more about the benefits of cross selling here!
How could you add value to your products or services?
How would you benefit from an experienced business coach?
You shouldn’t have to fight your way through conflicting and confusing advice. We’ll support and guide you so you can make clear, confident decisions.
Book a discovery call with us now and find out how we small business owners like you find a clear path to your own business goals – aaand we’ll help you get your pricing strategy sorted!