A recent study indicated that a 1% change in discounts can lead to a 9% change in operating profit.
This can represent a huge change to your bottom line. Reducing discounts can be positive, if you increase discounts it can devastate your profit.
So what can you do about preventing discounting? Here are three things to think about ….
- Make sure you can communicate the value you deliver for your customers. If you compare your price to the value you deliver it will be more difficult for a customer to justify asking for discounts.
- Make sure your offering – compared to your competitors or other alternatives – drives value for the customer to the extent you do not need to give discount.
- Ask why you should discount – sometimes the need to discount is simply because of a predisposition that we should or that the customer will ask for it.
Of course it’s easy to say “avoid discounting” however not always easy to do.