If it doesn’t make cents – it doesn’t make sense!
Simply if your gross profit margin (GPM) is 50% and you sell the item at a 50% discount you make no profit on the sale. On top of that, you have other costs associated with the sale, such as staff costs and packaging, to name just two. Unless your discounted items are loss leaders – meaning you aim to also sell to the same customer more expensive items at the same time, that are not discounted – it makes no sense.
Your customers will expect future discounts!
Every customer loves discounts and once you discount your goods and services – you guessed it – they expect it again. And if you don’t have a sale on in the moment – they will expect a discount anyway or they will wait until you have your next sale.
But I am having trouble selling some of my inventory at full price – what do I do?
If you have slow moving or obsolete inventory – don’t discount – find another sales channel. Pending on the size of your operation, you can either offer the goods on Ebay under a different name, set up a factory outlet or sell it through an auction house such as Greys Online.
The benefit of this is that you get rid of your old stock without creating the perception in your customer that you are a cheap discount business.
Instead of discounting provide superior customer service and stand out from your discount competitors. Your customers will love you and bottom line will look much healthier.