8 Good Reasons to Ditch Offering Discounts:
Today is the big day and everyone is bragging about the discount. This is AWESOME as a consumer, but not the best decision for entrepreneurs, business owners, and online affiliate marketers. Below are 6 reasons as laid out in Entrepreneur Magazine. I’ve added a 7th and 8th reason below and love to hear what you think as you may agree or disagree and both are cool
1. Too much emphasis on price
By offering discounts, your primary focus is on price rather than your products or services. If the only competitive advantage you have is price, your business is in big trouble. Price-matching has become commonplace, so you need to rely on quality and service levels to make it in today’s consumer-centric economy.
2. Price wars
Offering discounts can result in price wars with your competitors, and bigger companies nearly always win these wars because they have enough financial backing to stick it out the longest. For a business just getting off the ground, this is a fight you don’t want to enter.
3. Wrong impression
When a company offers a discount to their customers, they’re taking a big risk of devaluing their services. Customers can get the impression that the services being offered aren’t worth paying full price for. It also sets a precedent in the customer’s mind that your pricing isn’t firm.
4. Negative impact on profits
If competitors match your discounted prices, not only will you be left with less money in the bank, but you’ll still be expected to produce high-quality services at a discounted price. And if your competitors are in a position to hold the line on the lower price, you can create a permanent reduction in your profits.
For product-focused companies that offer products at a discounted price, there’s a risk: Customers might buy as many products as they can at the discounted price. Then, not only will you have to scurry to provide a mass amount of product, but this can also negatively affect future profits because your customers won’t need to buy once you lift the discount.
6. Negative impact on quality
As stated above, offering a discount can lead to your company having no choice but to provide a greater number of products or services in a short period of time. This can lead to decreased quality to get everything done on time. The lower the quality, the greater the chances of your company losing its credibility and gaining a bad reputation.
7. If you are paid commissions for marketing a product that cost $100 and is worth $100+. This is a product that the consumer will buy every month and always be happy with the value. The moment you sell it for $50 the customer buying will never want to pay $100 and always feel like the cost/value is $50 and you are only getting paid the commission on the sales price.
8. A Speaker like Tony Robbins cost $250,000 for 1 hour speaking. He does not do a discount. The reason is he will not discount his performance and therefore why to discount his price.
If you’re considering offering a discount, take the time to sit down and ask yourself why you want to. Specifically, ask yourself whether it’s the easy way out.
As with every rule, there are exceptions. Occasionally, discounts do make sense. Just make sure you’ve considered what discounting could mean to your business.
What experience have you had with offering discounts in your business? Did it work out for the best? Would you do it again? Share your thoughts in the comments.
I have a start-up company with a shoestring budget and a grassroots mission. I really need the help of friends to get this brand off the ground. I also feel confident enough in the value of the products that I no longer discount products. Customers and members get the best price and they keep coming back for more. I hope today you will try our products.
We do offer free shipping and it is coming all the way from Thailand. I’ve put the website link in the comments below.