Are you finding yourself giving customers more discounts than intended?
Find Yourself playing pricing defense with customers who feel that your product or service isn’t “worth the price?”
Only attracting potential customers who are always price haggling?
Giving Discounts Isn’t the Answer
A common mistake rookie entrepreneurs make is giving too many discounts out of fear of rejection. The word “no” seems intimidating because most people don’t say it enough. When they hear the word it feels like the ultimate betrayal.
Business is just like marriage. Whatever your flaws are they’ll be exposed.
Always be confident in what you’re delivering to customers.
What about the saying, “a sale is better than no sale.” That’s the wrong mindset and it’s a setup for failure. It says tolerate any and everything just to make a sale.
All money isn’t good. Not everyone is your customer.
The Truth About Sales
Sales are the livelihood of your business, but only from a target audience who understands the value proposition. Once your unique selling point is clearly defined, they will almost always buy whatever you sell. Sales from those who aren’t your audience means a higher acquisition cost.
Excessive discounts are a detriment to your business credibility. Your business will be perceived as a discount haven. The big box craft stores can give frequent discounts due to the vast amount of inventory they have in stock. Plus you don’t want to attract deal hoppers who follow your social media page or join the mailing list just for special offers.
Are discounts good or bad for business?
It depends if your business is profitable, has excess inventory, or a strategy in place. Customer discounts reduce your gross revenue. Inventory (raw materials, work in progress, finished goods) is a current asset, but becomes a liability when unsold. To correct the inventory problem, order small quantities of inventory until there’s a base to support bulk purchases. You can’t give a freebie or discount just for the sake of doing so. There has to be an upgrade strategy following the offering.
Let’s Talk About Value
As a craft seller, it’s important that you know the value customers are getting from your goods or services. One of the greatest assets is having the ability to take raw materials and convert them into finished goods. Consider the amount of time, money, and noncash resources that it costs to produce a product. If your customers could do it themselves, they would’ve done it a long time ago.
Ways in which you can avoid giving discounts:
- Add a bonus item (makes customers feel they’re getting a freebie)
- Sell products in bundles (gives pricing variety)
- Give a shop credit towards future purchase
- Setup a points program
How about when customers ask you for a discount?
Ask yourself how are you positioning the business (social media presence, website, email communication, event displays appearance)? Always be clear in stating price (website, advertisements).
Is your product or service so unique that it can’t be duplicated by competitors? How’s your marketing and brand messaging? Are customers wondering why they should buy from you?
Be professional in responding. Don’t take the price defense bait. You have people out here who will always challenge others and look for a reason to justify not buying anything.
As A Business Owner Consider These Things:
- You aren’t in business to be price haggled
- It’s not all about the money, but don’t forget the money either
- Excessive discounts works in the short-run, not the long-run
- Never chase anyone for a sale
If you found today’s blog helpful, feel free to comment below.
If you want to know how much your time costs, please download the worksheet here.