• New Wave Accountants

3 Reasons You Might Want to Think Twice before Discounting

By now, you must have read articles about how discounting can be an excellent way to make more sales, improve your profits, attract new customers, and grow your business. Know, however, that these benefits will only be valid if discounting is appropriately done. Unfortunately, if done wrong, discounts will do more harm than good to your company. Regardless, the cons of discounting are essential to consider, as it can give you a good idea of why you might want to think twice before going ahead with discounting your offerings.

That said, here are a few reasons you may not want to opt for discounting:

1. Hurts Confidence

When you see a cheaper product next to a more expensive product, what do you automatically assume? In most cases, you would assume that the cheaper product is of lower quality than the pricier product. Of course, in reality, this isn't always true, but this kind of perception is what people might have if they see your products at a discount.

Sure, those who want to save money will make the most out of your discounts. However, continually discounting your products can hurt your reputation. Customers will wonder why you're always discounting your products, thinking that the quality is too low to be worth its original price.

2. Covers Severe Issues

If you are dealing with poor cash flow, discounting might seem like an easy way out to increase sales and the like. Of course, this will only happen if you plan your discounts properly. Unfortunately, discounting forces you to sell more, and if you can't balance the number of sales with the discount you're giving, you're just masking the original issue.

As such, if you are trying to improve cash flow, it is far better to consult with your accountant to see where costs can be trimmed. In doing so, you get a better long-term plan to improve cash flow, whereas discounts will force you to sell more in an attempt to make money.

3. Encourages More Discounts

When you set discounts, your customers will expect more discounts in the future. This is generally a given. However, if you continually offer discounts, all your other products that are not on discount will automatically look like they are much more expensive and not worth the price. Unfortunately, this is the price you will have to pay when discounting a product. As soon as you offer a discount, customers will expect to see this come back again.

For that reason, don't only give discounts because you feel like it. Plan the whole strategy out, and ensure any discounts you offer now are part of a bigger plan that you can sustain. If you can, work with your accountants to see how you can use discounts to boost your cash flow.


All in all, when going about discounting, take your time first to understand your goals. If you can, work with an accountant and see how you can use discounts to benefit your business, not bring it down. Remember, discounts aren't necessarily a bad thing. They can be used to do so many great things, such as getting rid of old inventory, attracting customers to try out a new business model, and more. However, if done improperly, it can lead to the demise of your business quite quickly. Because of this, working with an accountant will ensure that the discounting plan you have is sustainable and helps to grow your business, not the other way round.

New Wave Accounting is an accounting firm offering small businesses in Gold Coast the end-to-end and bookkeeping service they need to stay on top of their finances. If you are looking for the best accountants to help you plan the most effective discount strategies, work with us today!

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