Should I give the customer a discount to get the sale?
Every small business suffers from the dilemma, should I give customers a discount to get the sale? It’s my opinion that you should not discount your products to get customer and here’s why:
Let’s say you’re a contractor or consultant like me. We both bill our customers or clients at a rate of $50.00 (plumbers make more than we both do). To get new customers, I decide to give new customers a 10% discount to get their business and in your contracting business, you decide to focus on selling quality and that you’re worth every penny… maybe you should even chare more money?
For the sake of discussion, let’s assume that each of our businesses has the same average quote price of $2,000 and our costs are 70% of the original quoted price. You could imagine that if you’re a product company, the cost of your product is fixed, so any discount comes out of your profit.
Our costs are the same at $1,400, but are profit is drastically different. Your profit is $600 and my profit is only $400, that’s a 33% difference!
In the course of a month, I find 10 new customers who take me up on my offer for the 10% discount. That means I’ve lost 10 times $200 or $2,000 dollars. I actually have to work harder to now find five more new customers in that month (5 x $400 profit) to have the same profit as without discounting.
So why you should not give the customer a discount to get the sale:
Protect your price and your profits! If a potential customer or client asks for a better prices your must be ready to answer without hesitation why your business or products our worth what you’re asking. Hold firm on your price and sell value!
Sell Value and you’ll have to work less to make the same profits
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