As a business owner, it's tempting to run a discount sale, especially when you're trying to move inventory or increase your revenue. However, discounts, even when small, can be dangerous for your business in the long run. Many of us believe that we offer a discount to be seen as offering value or as a way of thanking our customers for their loyalty, but what you might not realise is the subtle, long term devaluation hidden in these discounts.
Giving discounts to your customers sets a dangerous precedent for your business, and if not done with caution, this could do more harm than good. This blog aims to explain why you should never discount your services, how it devalues you and your business, and how it teaches your clients to wait until you have another sale.
1. Devalues You and Your Business
Discounting your services sends out a message that your business is not worth what you charge for it. Why should a customer pay full price for your services when they know they can get a deal from you whenever they want? Offering discounts constantly undermines your brand, and your customers won't take you seriously. Instead, they will wait until you run another discount sale to purchase from you again.
2. It Teaches Your Clients to Wait for You to Have Another Sale
Once you offer a discount to your customers, you'll find that they'll start waiting for you to have another sale. This means that rather than paying full price for your services, they’re holding out for a discount. This could lead to a drop in your cash flow, especially if you're a small business. What's worse, is that if your discount sale isn't successful, you could find yourself in a much worse financial situation than before.
3. Discounts Lead to Expectations
The moment you offer a discount once, you have set a precedent that your prices aren't fixed. This means that in the future, your customers will attempt to haggle prices with you continually. Once you start down this road, it's hard to turn back, and you'll continue negotiating with customers who are looking for deals. Soon, you'll start to feel as though your products or services are not worth what you charge for them, and your customers will agree.
4. It Makes It Harder to Innovate
Offering discounts constantly undermines your brand value, making it much more challenging for you to innovate and stand out in your industry. Why should a customer trust your business if you're always running discounts and sacrificing profit margins? Rather than creating a new service that is unique and valuable, you'll find yourself stuck with the same services because you don't want to lose customers who have only stuck around because of your discounts.
5. It Can Devalue Your Industry
Offering discounts can damage the entire industry, rather than just your business. Your discount sale might undercut your competitors, leading to a race to the bottom. Instead of competing on quality, price, and service, everyone is trying to offer the lowest price, which devalues the industry as a whole.
Offering discounts might seem harmless, but it's not worth the long-term damage it can do to your business. Instead, focus on offering value to your customers and building relationships based on trust and quality. Do your research to determine your unique proposition in the market and focus on delivering that promise to your customer base. By doing this, you'll build a reputation that is based on quality and value, and customers will be willing to pay full price and even more for your services. So, don't sacrifice your brand value for short term gain. Hold your head high and stick to your pricing without making concessions for your services. Want to boost your biz without risking the farm? Click here for some sweet tips on how to build your brand. Get ready to watch your business soar!