Some business theorists will say to “never discount your pricing or worth.” And these words are typically good to stand by when considering pricing for your standard rates. However, it’s best to master the art of using discount pricing as it is intended to be used in order to master your clients’ buying behavior.
While giving discounts may not sound like the best way to make money, it is a great way to ramp up sales, create customer appreciation, and bring more attention to your business. But before you start adding discounts this way and that, you’ll want to consider some strategic pricing methods.
This way, you can still make money while others feel that they’re getting great deals.
Use these tips to master your discount offers:
1. Budget For Discounts
Offering discounts and sales should become a cost that you account for out of your standard sales prices.
For instance, if you plan to eventually offer a substantial 15% off sale during the holidays while regularly offering members discounts of 5-10% off, make sure that does not cut into your profit or expenses.
Let’s say your one hour massage is priced at $85. The steepest discount you offer all year is 15%. Your business also strives for at least a 10% profit margin. To give a discount and take profit costs you at least 25% of $85, or $21.25. Now you know that your expenses including salary should be no more than 75% or $63.75. From here you can figure out how many massages you need to give to cover your expenses (which is called a break even point).
Making sure that your discounts are included in your pricing structure can help you figure out if your expenses are too high, prices are too low, or if yo want to limit the number of pre-paid services you offer. Play with your numbers to make sure everything adds up
If a client does pay the full price of your services without a discount, then that’s just extra profit in your pocket! Now could be earning up to 25% profit instead of your normal 10%.
2. Make Offer Usage Crystal Clear
Write down the following words. And then plaster them on your sale pages, policies, footers, and anywhere else that is relevant to the offers that you are providing:
“This offer is not valid with any other offer”.
Someone will eventually ask if you can combine sales offers. So, in order to make sure that you never have to lose out on money unnecessarily, you’re going to want to make your policies crystal clear.
For instance, if someone wants to take advantage of your 10% veteran’s discount and your 15% off holiday sale for a combined 25% off, you’re not going to want to lose out on that much. So by having a clear policy in place, you can confidently tell them that they can’t combine the two discounts but can take the higher of the two.
In this case, they’ll be able to take 15% off rather than the 10% for a greater discount.
3. Adapt Your Prices With Inflation
Everyone should feel the weight of inflation and adapt accordingly to economic changes.
Generally speaking, prices go up every year due to inflation. And this also means that your living costs are increasing. Your pricing should also grow on a regular schedule to keep up!
If you don’t increase your prices over time, you are, in fact, lowering them as your buying power decreases and your expenses keep growing.
So when you’re giving discounts, give them in terms of percentages instead of dollar amounts. This way, your discounts also carry the weight of inflation.
When you keep the same low price year after year, those steep discounts can seriously hurt your bottom line.
4. Use Strategic Discounts to Drive Sales
Drive your client’s buying decisions by employing strategic pricing and discounts. It’s human nature to waffle on decisions. So if you don’t give your clients a reason to buy quickly, indecision can keep your clients from pulling out their wallets.
Giving incentives in the form of regular discounts such as packages, memberships, or annual sales drives your clients to buy more willingly. It also gives your business reliable revenue streams that become stable and effortless.
5. Give Back
Use discounts or even offer free products and services to become a philanthropist.
You should also use your budget and pricing structure to give back to your community or your clients. Often, healers give discounts for “friends and family”. Or they provide them to people who need financial assistance. But they can then start to attract a lot of clients in financial need.
No doubt, we are unselfish people who love to help others. But you never want to do so at your business’s peril.
You can use your generosity as a strength instead of an income-depleting weakness. If you are going to give, use it as an opportunity to strengthen your reputation and brand awareness.
Instead of blindly handing out discounts to those in need. Maybe you could raffle off one massage a month to a person in a service position such as a nurse, firefighter, or another essential worker.
Use a nomination process to find this person. And run the nomination process through your marketing. Now you are both giving back and receiving a promotion for your business in return!