Quote for the Day
“You don’t make progress by standing on the sidelines – you make progress by implementing ideas”
Shirley Chisholm
Be Careful with Discounting your Prices
I recently had a coaching session with a client on the topic of discounting – it applies to most businesses so I thought you might benefit from an anonymised recap.
To set the scene: if you operate at a 30% margin and cut your sales price by 10%, you will need to sell 50% more volume just to maintain the same profit!
If you put up your prices by 10%, you can afford to sell 25% less volume to maintain your current level of profitability.
Which would you rather do?
There are some good reasons to discount your sales price, which include clearing old stock and boosting your cash, but think very carefully before you embark on a discounting strategy.
If you still want to go down the discounting route, it’s worth asking your supply chain for a contribution to share the load.
If you still want to develop a discounting strategy, ask yourself the following questions:
- What are your business objectives and how does discounting support them?
- What is the product or service, who benefits, and why are you discounting it?
- Who is your customer base?
- How do customers interact with your business?
- Are you adding value with your discounts?
- Are you still guaranteeing your profit with your discounted prices?
- Who are your competitors and what is their discounting strategy?
- Is a discount strategy worth it?
What is the answer for you?
I look forward to working with you this year but, in the meantime, if you would like to know more about how to resolve your defining issues of 2022, contact me by email alan@mrwcs.com or phone 07860 813444.
Growth and Profit Club
Please note that my next free Growth and Profit Club workshop on Zoom will be at 16.00, on Wednesday, 11 May 2022, and the topic is “Recruitment, Retention and Hybrid Working”.
Membership of my Growth and Profit Club will allow you to access other business leaders’ experience, knowledge, and wisdom, and share your own, helping to develop the expertise and proficiency of everyone on the Zoom video call.
If you would like to discuss the challenges and opportunities for your business or would like to join my Growth and Profit Club, please contact me on alan@mrwcs.com or phone 07860 813444.
