4 Reasons You May Want to Utilise Discounting
If you've ever given a discount before, chances are that it has stemmed from fear—fear of losing a sale, fear of failing to close a deal, fear of not winning a new business, and more. This is true for most, if not all, businesses at some point. Discounts have become a regular part of business, and while it may seem like a great way to ensure your goals are met, this obsession might leave you wondering if it is even worth it in the first place.
Just like all things in the world, there are pros and cons to discounting. However, we're going to focus on the pros of discounting, sharing with you a few reasons you would want to utilise discounts:
1. Get Rid of Old Inventory
Do you have any old inventory lying around? Do you have too much of a particular product? If so, then getting rid of them quickly might just be more worth it than trying to sell them at their original price, albeit slowly. This is because old inventory unnecessarily takes up space where new inventory could be in. This can seriously impact your ability to make sales, especially if your audience is no longer interested in your older products. As such, giving them a hefty discount is an excellent way to make some quick cash while still freeing up your warehouse for new inventory!
2. Motivates People to Buy Now
If planned carefully, discounts can be a great way to massively boost sales and even reduce time in the sales cycle so that you can get cash quickly. Of course, the sales you make still need to be profitable. Revenue itself might seem a lot if you discount heavily, but the real factor to look at here is profits. No profits mean no money being made, and no money means no sustainable means to keep your business running! In other words, ensure your discounts still net a profit!
3. Keeps Your Staff Busy at Work
When your business isn't selling anything, your staff will be laid back, even lazy. Pair this with reduced hours and the drop in work motivation, and you might just have yourself a workforce that no longer cares about your business. In the long run, more and more of your employees will end up leaving for other opportunities. As such, to keep them busy and motivated to work, a great way to spark more sales is through discounts. When more customers show up to purchase stuff, the more your employees are engaged, keeping them busy and even happy at their job!
4. Exposes a New Model to the Audience
People aren't always open to change, and when you do decide to change your business model, people might be a little afraid to try it out. A little discount can be a good incentive for them to adapt to the new business model. For example, if you just started selling online, you can offer promotions and discount codes to redeem if they check out on your online store! Keep in mind, however, that what you are doing should be sustainable. Also, be transparent about future rates to help customers know what will happen once the promotion is over.
Remember, don't just read this and think that discount is what you must do right now. Discounts, although full of pros, also come with their cons. Always take the time to carefully understand the ups and downs of discounting to help you know whether this is the right tactic to pick. If you do decide to utilise discounts, do it smartly. Remember, revenue and profits are two different things. Your task is to implement a strategy that interests customers and is sustainable profit-wise, creating a win-win situation no matter what.
New Wave Accounting offers bookkeeping and end-to-end accounting services to help small businesses in Gold Coast scale and grow quickly. If you are looking for accountants in Gold Coast to help you maximise your discounts and more, reach out to us today!