Think Before you Discount
It’s a tempting idea isn’t it?…to offer a reduced price on your product or service in hopes that it will drive sales and gain you lots of new custom. Yes, this is exactly what discounting does. However, the spike in sales is only short-term, and the customers gained more than likely won’t be returning for repeat custom. Discounting will not win you long-term success and may do more damage than good. Let’s explore why discounting may be doing more damage than you think…
As business owners, we are often tempted to discount our product or service, thinking it will win us customers and drive growth. Where the real problem lies isn’t with generating the new customers and sales, it’s what that discount in price represents:
- Lower Perceived Value
Most people value a product/service based on its price. Lowering the price effectively demonstrates to your prospect that what you’re offering won’t truly add value to their life. Whilst a customer may still might buy from you, they won’t place as much value on your brand as they most likely would have before.
- Bad Precedent
When you offer a discount, either on the first engagement or the seventh customer engagement, there’s no going back. As soon as you lower your price, your customer will expect the same price next time.
- Lack of Confidence
Cutting your prices tells the customer that you don’t believe in what you’re selling enough to warrant selling it for the standard price. As soon as you offer a discount, your prospect immediately loses confidence in you and assumes that you don’t have faith in what you’re trying to sell to them.
- Price Focused
The last thing you want in a sales conversation is to be focused on price, and that’s just what happens when you offer a discount. When the conversation is focused on price, it leaves no room to talk about the value, the story or the qualities of your product/service. In the long run, it’s hard to sell something based on it’s price than on it’s value.
Question: Is price your only competitive advantage?
When you offer a discount, you take the focus away from the value you provide and basing it directly on the price. To maintain higher prices and steady business growth, you have to offer value. Discounts hinder your ability to do that as a reduction in price damages your price integrity and makes re-focusing on value difficult in the future.