To sale or not to sale: 7 ways to decide if you should discount your items or services

Everyone loves a sale, right? The latter half of the year is kicked off with Amazon Prime Day in July and then there's Black Friday and Cyber Monday near the end of the year. While these are excellent times to catch a wave of shoppers, other businesses have deals throughout the year as well.

But when is the best time to put your goods or services on sale? And is that the most profitable strategy for your business? We'll uncover the most useful ways to decide if discounted goods and services are adequate for your brand.

4 reasons to open a sale

Connecting with customers or launching your business can be difficult, but a sale could be the foot in the door your company needs. Here are four reasons why you may consider starting your own discount promotion.

1. Sales can drive business

Even if you're new to the industry, a deal can pique interest in your business with the right marketing tactics. Flash or seasonal discounts add a sense of urgency to your products or services and can open the door for new customers to explore what you have to offer. But, if you keep the sale going for too long, your customers may grow accustomed to these prices and drop off when you return to regular costs.

2. Attract new customers

Sales and discounts are naturally promotional and can help inspire your teams to develop interesting and exciting marketing strategies. Social media, email marketing and geolocation marketing can connect your business with potential new shoppers that might not have been able to find your company otherwise. Budget-conscious buyers may take notice of a well-timed and properly structured promotion.

3. Move excess inventory

Many retail businesses will promote an introduction to their newest line by discounting last season's items. If your company happens to purchase too much of a certain product, a sale can help reduce any excess and free up space for new items.

4. Target a specific demographic

Depending on when you'd like to start the sale, you could launch the promotion to attract a certain demographic. This could be teachers or students starting a new school year, for example, or travel items during the summer or holiday seasons. If you've noticed that a certain buying group has fallen off recently, finding a creative way to reach them with a deal could be a new way to reconnect.

3 reasons why a discount promotion may be the wrong move

There are times when a sale is not in the best interest of your company. These reasons will largely depend on how you want to present your brand.

1. Sets a low value for your goods and services

Your sales team works hard to communicate the value of your product to potential customers. If you're breaking into a new venture, a discount could communicate to buyers that your products or services are valued much lower than you may have communicated initially.

2. Coming off as untrustworthy

Everyone wants to know that they're buying something of fair value and that they're not spending their hard-earned money on something that isn't worth it. If you've set a price point for your product and services, but then discount them at a significantly lower price than advertised, this could send a red flag to buyers. It may be tempting to offer a discount if you're speaking with a resistant prospect, but this could send the wrong message to them in the end.

3. Cuts into your profits

If your profit margins are tight, maybe a bargain deal isn't right for your business. If you're just getting started in the industry or the market is slow, a discount promotion could hurt your profits even more. Consider if you were to offer a 50% sale on your stock or high-traffic items, that would mean you need to sell twice as much to reach the same revenue goal.

In addition, your salespeople will need to field all of the questions and deals needs coming from prospects — further devaluing your product or service when your teams feel worn out.

For more small business tips and advice, reach out to the Law Offices of Donald W. Hudspeth, P.C.

Categorised in: Starting a Business in Arizona

This post was written by