In this video Jim discusses discounts and profits. When should you offer a discount or lower your prices? To answer that question, you must know how much more product you have to sell to make up for the lower price.
According to Evan Horowitz of ehadvising.com, discounts work but the business may become a slave to the discount to keep the sales coming. Also, discounts may reduce the perceived value of your product or service.
His suggestion is to offer an incentive that boosts sales, such as a bonus. This way, you’re not crippling your profit for the long term. For example, in a clothing store, if the customer buys an item like a coat, they can get a scarf for 50% off. The business gets sales without lower the price and the customers feel they are getting a deal with the bonus item.
Remember pricing is tricky and discounts can be messy. There is no “one” way that works for all businesses. Take a look at your profit margin and brainstorm with your team to come up with the best plan for your business.
Jim leaves us with this last thought. One of his partners told him if something is selling really well, raise the price while there is demand. He also said, if something is NOT selling well, raise the price because even if you sell less items, you will make more money.
In celebration of Communications Concepts, Inc. 40 years of being business, CCI’s President and Founder, Jim Lewis, is sharing 40 tips that he has learned throughout the years about how to survive and prosper in business.
It’s our hope that by sharing tips from our company’s 40 years of experience, this information helps you to improve and grow your business. Subscribe to our social media accounts so you that don’t miss our future business tips and videos on a variety of subjects.