“Looking for a jump in business? Have a sale!” “Want them to buy? Offer a discount!”
That’s the conventional wisdom, and indeed it works…but at the expense of profit! Nonetheless, so many businesses I work with find themselves slaves to discounts in order to keep the sales coming. Discounts, discounts, and more discounts.
It doesn’t need to be this way! I’ll show you how to keep the persuasive power of discounts, but make them way more profitable.
Discounts are Sticky, and Messy
The problem with discounts–in addition to the profit you give up–is that they reduce the perceived value of your product or service. In other words, if X normally sells for $100, and you’re discounting it to $80, you are teaching me that it’s only worth $80. Next time I want to buy, I only feel it’s worth $80. I’m more likely to wait for the next sale (if it’s a store), or to ask for another reduction (if it’s a service).
So when you offer a discount, you’re not only cutting your profit on THIS sale, you’re likely reducing your profit on future sales!
A More Profitable Promotion: A Bonus
The way to offer an incentive that boosts sales–WITHOUT crippling your profit for the long term–is to offer a bonus. For example: With every haircut in January, get a free bottle of shampoo. Or, new personal training clients get a free nutrition consultation.
This way, you get more sales by providing additional value, rather than by dropping the price. Customers feel like they’re getting a deal…and they still believe your product/service is worth the full price. You’re just throwing in a little freebie.
Action Plan
Brainstorm three bonus promotions you could run in your business. Keep the normal price of your “bread & butter” product, and find some inexpensive extra to offer for free.
Some more examples:
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- Buy a coat, get a scarf 50% off
- Hire us for this website design project, and we’ll do a free social media review
- Sign on for three months of service, get the 4th month free
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Let me know what you come up with by posting a reply below!