How can I offer discounts on my products without impacting my brand? I’m trying to build a high-end jewellery business and don’t want to seem cheap and cheerful.
Discounting is always temping when sales aren’t quite at the dizzying heights that you have planned.
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It’s all too easy to take the easy option for the sake of some cashflow, but what are the ramifications of discounting to your brand?
Discounting regularly can dramatically devalue your brand and teach customers to wait for a deal, rather than pay full price.
Don’t get me wrong – discounting CAN work well. It provides an incentive to make a sale from people that may have been hesitant about purchasing, it stimulates sales in a quiet economy and regular sales can cement your position as the cheapest in your market.
The problem is, we rarely calculate what the discount means to our bottom line. Discounting a 20% gross margin product by 10% means that you’ll have to double your sales to reach the same level of profit.
There are many great alternatives to discounting high-end brands without worrying about whether customers will pay the higher price in the future once the sale ends:
- Create an outlet variation of your brand so that discounted products get associated with the outlet.
- Give extra “gifts” with the sale, rather than a discount incentive.
- Supersede products like Apple, keeping older stock at lower prices.
Above all, train your staff not to immediately jump to offering discounts to get the sale over the line. As soon as your sales staff believe that they have to sell the product at full price, they’ll make your customers believe that it’s worth full price.