If you constantly feel pressure to lower your prices – sometimes without being asked – there are more solutions on offer than offering a discount. And, once you take the price reduction off the table, you’ll be surprised at the number of ways to add value without making a dent in your profits. 

Add, don’t subtract

Instead of reducing the price, add something to the sale that has meaning for the customer but doesn’t impact your profit as much as a discount.

If they’re asking for a deal because of cashflow issues, could you offer a plan so they pay in instalments? Or perhaps you could break down the product or service into parts or stages, and stagger the delivery and payment.

Northern Tonic MD Rob Ormiston says:

“The obvious solution, if we think we might lose a sale, is to knock something off the price. But don’t feel like you have to devalue your product or service like that. It can lead to a slippery slope where everyone expects the same thing. 

“Be confident in your price structure and what the customer is getting for that money. If you sell products, what has gone into designing it, making it, sourcing it? If you provide a service, what does it involve, how is it different to elsewhere?

“You don’t want to come across as defensive but be prepared to sufficiently justify the cost of something, if challenged. Then hold tight.”

Same as it ever was? 

The bad news is that the price of everything is going up. The good news is that the price of everything is going up. 

Rob explains:

“We’re used to paying more at the moment. It’s a sad reality. Arguably, if you’ve managed to keep your prices stable for the last year, six months or even four weeks, given the current circumstances, simply not increasing the price tag is tantamount to a discount.

“If you can promise that your product or service will be the same price next year, and it’s a regular purchase for your customer, they can confidently factor it into their own budget.”

Getting to know you 

Is a discount really what the customer wants? If you genuinely don’t know, find out. Forge a better relationship with repeat customers. If your customer isn’t the end user, finding out how they operate will give you a better insight into what they expect from you as a supplier. Would a contra deal work, if you both have something the other one wants? Incidentally, make sure you understand how to include this into a tax return. 

Rob adds:

“If your customer is a consumer, what do they really want beyond the product or service you have on offer? Understanding the motivation behind a purchase can also help you to decide if a discount really is the most suitable option for you, and the biggest deciding factor for them. 

“This approach will pay dividends in other ways too. If you don’t understand your target market or you aren’t changing your attitude to business alongside their changing needs and desires, slashing your prices is not the way to go. Be aware of what’s going on. Make time to talk to your customer –  more than just small talk at the till.”

It’s payback time

A transaction is an agreement between a buyer and a seller, so remember that the best deals work for both of you.

“The golden rule is to always ask for something in return. Don’t offer something for nothing,” explains Rob. “You could ask your customer to leave a review, subscribe to a newsletter or provide a warm lead.

“Or, if the customer is someone you work with regularly, strike a deal where longer payment plans from you translate to consignment orders from them. Or perhaps quicker (or free) delivery from you equals payment up front on their side.”

The bottom line

If you feel like you’re having to resort to discounts more often than not, it may be the sign of a deeper problem. Unless you have structured your price list to intentionally knock something off the total of every sale, your business won’t succeed if your income can’t sustain your overheads. 

Rob concludes:

“It’s a daunting prospect, but rather than rewrite your price list, a general overhaul of your company’s financial direction may be a more sensible option. Instead of conducting business on a sale-by-sale basis or having one rate card per customer, look at your long-term goals and work your way back from them. 

“Whether you run a small business or a large corporation, have been established for decades or set up recently, take an overview with a fresh pair of eyes. Or, ask someone else to give you extra insight. Are the right people in the right roles? Are your processes working at optimal efficiency? Do your opening hours still work? Does the direction your business is heading in match your initial business plan? If not, what do you need to change?”

By establishing a solid financial direction, defining short and long-term goals, and putting in place a clear pricing structure, you have an established business model. This means that your employees are confident when they conduct business on your behalf and your customers know the boundaries of the transaction, and can budget properly for their purchases if they are regular patrons.

Then, if you do decide to offer a discount on a product or service, it is exceptional rather than expected, and a genuinely special offer.

If you’d like to discover more about how to make the move into cryptocurrency, without risking your business, get in touch for a chat.

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