Offering discounts is a great way to encourage your customers to make a buying decision. Using discounts can help you differentiate your business from your competitors. If you carefully plan your costs, sale price and profit, you can improve your overall results using discounts. Use these tips to use discounts effectively.
1. Attract Customers with One Product Discount
Discounting a product can be a great way to start a relationship with a new customer. Eventually, you may be able to sell that same client a more profitable product down the road.
Say, for example, that you sell hiking gear and outdoor travel packages. You attract a new client with a discounted price for hiking boots. The same customer buys a hiking trip package from you a month later. The second purchase is more profitable for your business.
2. Offer a Discount for Longer-Term Relationships
You can also offer a discount in exchange for a long-term commitment. If you sell magazines, for example, you can discount your subscription price. The price per magazine may be cheaper for a 2-year subscription, rather than a 1-year commitment.
3. Offer Additional Services for Free
Businesses can also discount by offering an additional service for free. A software company may sell and install software while offering software training for free.
If you face heavy competition, you may want to offer discounts to compete for business. It’s important, however, to know your break-even level. Don’t offer a discount that is less than break-even. This strategy allows you to discount and still earn a profit on each sale.
4. Bundle Products Together
Bundling your products allows you to heavily discount one product and still make a reasonable profit on the entire bundle. A bundling strategy can work because the products you put together can be enticing for your customers.
A grocery store may display charcoal, hot dog buns and other grilling items during the summer. The store may heavily discount the charcoal, but make their normal level of profit on the bundle of products.
5. Heavily Discount One In-Demand Product
To draw customers to your business, you may heavily discount a single product that is in demand. This loss leader strategy may increase the number of clients the come into your business. Those clients end up buying other products that have can generate a higher profit for you.
Discounting can be an effective strategy to increase your total sales. Make sure, however, that you’ll clear about the profit you will generate on each product you sell. By using several different strategies, you can increase your sales and profit.