Offering discounts is tempting. There’s no denying that discounting products and services does bring in a surge of new customers. But who are these customers? And how does the influx affect the future of our companies?
I believe there is a time and a place for discounting but it definitely has its downsides. Here are a few things to think about before you decide to mark yourself down in order to win the sale.
The Downsides to Discounting
- By taking less money for your product, you will inevitably have to cut corners somewhere. Either the product will suffer, or you and your team will suffer.
- Price tags have a strong influence on how you and your product are perceived. Most of us have a “you get what you pay for” mentality and while we’re all tempted to buy cheap, there is a part of us that expects we’re making a mistake. Pricing lower sends a powerful message about the quality of your product. On some level, you are telling your customers that you don’t believe in its value.
- Since discounting can make your product seem cheap, it might attract customers you don’t want. Bargain hunters and price shoppers can be demanding and they tend to take up more of your resources than their full-price paying counterparts.
- If you run a business that sells multiple products to your customers, you will find it incredibly difficult to raise your prices back up even if you are explicit from the start that the discounted price you offer is only “introductory”. Your discount-paying customers will often either throw a fit or go find something else they can afford.
- Although it’s tempting, prioritizing growth over profit in your business plan will only hurt you in the end. Cultivate great customers now and treat them like royalty. They’ll bring along their friends and family next time and your business will see nice, steady, organic growth.
Smart Ways to Discount
- Offer packages or programs that tie together several products or services at once. You make a solid sale that gives you a chance to really shine with your customers, and your customers feel like they’re getting a great deal. You add value, they gain value. Win win.
- Add bonuses or gifts to make the deal irresistible. This is a great way to add value and make your customers feel truly loved. Put some thought into the gifts you give your customers. They should be seamlessly aligned with the product or service they’re interested in purchasing. For example, when I am helping a new business owner with a comprehensive online marketing plan including strategic planning, website design, and social media marketing management, I might include a business card design and their first stack of business cards as a gift. It’s something they’ll need, and it’s something they’ll appreciate. And in the end, a striking business card I designed is free marketing for me and my services.
- Reward returning customers to show your appreciation and nurture your relationship with them. Discount for first-time buyers, and you’ll attract people who can’t or won’t pay your full price. But discount once you have people willing to pay your full price, and they’ll keep coming back for more.