Some businesses think twice about giving discounts. Nobody’s really sure where the boundary lies between discounting items to earn sales or losing profit.
There is something enticing about discounts, especially to consumers. Of course, who wouldn’t love a price cut?
But discounts could be a double-edged sword for businesses. As much as you want to put out discounts so people would buy more, but doesn’t automatically equate increased profit.
How come it’s bad for your business? You might ask. Here are our two-cents (and most of the business gurus would tell you) why giving out discounts may be a bad idea.
Trust and Confidence
Putting a discount on a product may give a negative connotation on your target market. When you put a price too low, this would look like you don’t trust your product or you don’t have that much confidence in the value of whatever you’re selling.
Work on building trust and confidence first. If you know you are selling the best product in the market, then you’ll know that whatever its price, it can speak for its value. Customers might look for a cheaper alternative out there, but know that they would also be happy to invest in a good, high-quality product.
If you hold on to that truth and put all that confidence in your in your product, you won’t even think about discounts anymore.
A Question on Quality
Lowering the price could imply a lower quality. While this might not be true all the time (or it wasn’t really the rule at all), but this is how most consumers would assume.
If you’re a social listener and you read customer reviews, you might be familiar with the terms ‘quality is expected given its price’. This means that most customers associate low price with low quality.
Like we said earlier, if you know you got a high-quality product, you’ll never have to set your price low.
Setting the Bar High for Low
Once you have given a discount and lowered price, your customers would then start to expect that, either, that price would still be the product’s price through and through or that you’ll be giving away discounts often. There is even a huge chance that they’ll expect for both.
It’s a given to give discounts especially for new customers or loyal ones. It’s the marketing strategy that we all grew up with. But have you noticed how customers only buy the first time and never buy again?
Maybe that’s because you already set the bar high on giving discounts or low prices. And when the customer starts to expect the same pricing throughout, you might have to keep up with it in the long run or lose them altogether.
Discounts are not bad at all. Everybody gives them out once in a while.
But it would be best to establish and build trust first. Work on highlighting the quality of your product. Get good reviews for it. The process of building the consumers’ trust is difficult but could be twice as rewarding than giving away discounts.
So by the time you’re ready to roll out one, it would just be the cherry on the top.