The nuances of offering discounts
Posted: Wed Dec 18, 2024 4:27 am
Almost every entrepreneur is eager to use discounts. The problem is that many do it spontaneously, amateurishly. Due to such lack of system, profits are often lost, because an unsuccessfully chosen discount can undermine the client's trust without bringing the expected benefit. The purpose of this article is to tell what types of discounts exist and how best to use them to generate consumer interest and even excitement.
Pitfalls of discounts
Discounts are not suitable for every business or in every situation.
You have to be very careful with them in the premium segment. Such goods can be sold at a lower price only as a sign of respect for a specific client. And even then, you need to think 7 times. After all, by making a product more accessible, you kill its elitism.
Too frequent and generous discounts make buyers lazy. Customers wait for sales, considering regular prices too high. And those who bought the goods at the old price feel annoyed when they see how much cheaper everything is.
Discounts shift attention from the merits of your product to its availability. The value of the product in the eyes of the client is lost. Everyone begins to get used to the fact that people buy from you because of the bargain price, not the high quality.
Even small discounts significantly reduce the profit from selling a specific product, because a discount is always formed by reducing profit. Let's say you sell an item for 1,000 rubles, with a markup of 200 rubles. You gave the buyer a 10% discount, that is, you subtracted 100 rubles from the cost. For the buyer, this seems like a small concession on your part. But you whatsapp number philippines lost 50% of your profit (we subtract 100 rubles of the discount from the 200 rubles of the markup).
This does not mean that we discourage you from using discounts. It is just that any marketing technique has its drawbacks, weak points. They need to be understood in order to wisely level them out.
Let us share some observations that will help you squeeze the maximum profit out of sales and promotions:
It is not worth making discounts less than 5%. They seem insignificant to the buyer and do not motivate them to buy. However, as we have seen above, they significantly reduce the entrepreneur's profit.
If the product is expensive and the discount in percentage is small, reflect it in money. Let's say, an item that used to cost 100 thousand rubles is sold for 94 thousand. 6% is not a huge discount, but the offer to save 6,000 rubles seems more attractive, because it is real money.
If the product is cheap and the amount saved by the buyer is small, reflect it as a percentage. For example, a T-shirt that used to cost 500 rubles now costs 300. Announce a 40% discount. This is noticeable. You can read more about such techniques in one of our previous articles.
When forming a discount policy, you should not limit yourself to classic discounts. There are also bonuses and gifts. However, the profitability of their use also needs to be carefully monitored and calculated.
Pitfalls of discounts
Discounts are not suitable for every business or in every situation.
You have to be very careful with them in the premium segment. Such goods can be sold at a lower price only as a sign of respect for a specific client. And even then, you need to think 7 times. After all, by making a product more accessible, you kill its elitism.
Too frequent and generous discounts make buyers lazy. Customers wait for sales, considering regular prices too high. And those who bought the goods at the old price feel annoyed when they see how much cheaper everything is.
Discounts shift attention from the merits of your product to its availability. The value of the product in the eyes of the client is lost. Everyone begins to get used to the fact that people buy from you because of the bargain price, not the high quality.
Even small discounts significantly reduce the profit from selling a specific product, because a discount is always formed by reducing profit. Let's say you sell an item for 1,000 rubles, with a markup of 200 rubles. You gave the buyer a 10% discount, that is, you subtracted 100 rubles from the cost. For the buyer, this seems like a small concession on your part. But you whatsapp number philippines lost 50% of your profit (we subtract 100 rubles of the discount from the 200 rubles of the markup).
This does not mean that we discourage you from using discounts. It is just that any marketing technique has its drawbacks, weak points. They need to be understood in order to wisely level them out.
Let us share some observations that will help you squeeze the maximum profit out of sales and promotions:
It is not worth making discounts less than 5%. They seem insignificant to the buyer and do not motivate them to buy. However, as we have seen above, they significantly reduce the entrepreneur's profit.
If the product is expensive and the discount in percentage is small, reflect it in money. Let's say, an item that used to cost 100 thousand rubles is sold for 94 thousand. 6% is not a huge discount, but the offer to save 6,000 rubles seems more attractive, because it is real money.
If the product is cheap and the amount saved by the buyer is small, reflect it as a percentage. For example, a T-shirt that used to cost 500 rubles now costs 300. Announce a 40% discount. This is noticeable. You can read more about such techniques in one of our previous articles.
When forming a discount policy, you should not limit yourself to classic discounts. There are also bonuses and gifts. However, the profitability of their use also needs to be carefully monitored and calculated.