A Guide to Discounts: Lowering Your Prices Without Losing Profits
Reduce Prices, Without Reducing Profits
One of the biggest double-edged swords in commerce is the price discount. On the one hand, discounts are great for enticing people to buy items that are stalling. And yet, if you rely on discounts too often your profits will take a significant hit. As a result, creating ideal sales promotions that improve profits can be a challenge for online sellers.
If you want to discount your products, use this guide to keep profits strong.
Determining the Ideal Discount
If you are planning to discount a product, you need to think about how much you want to lower the price tag. The discount should be big enough to appeal to consumers, without taking too much out of your profits. Certain products have more value than others, so maintaining the value of the product is another thing to consider.
Here’s a tip: you should avoid setting discounts larger than 40%. Marking down the price further will harm an item’s profitability. It can reduce the product’s perceived value as well, which can dissuade customers from buying it outright.
Always set a hard limit for how much you plan to discount your products. Plan your discounts early so you can set ideal prices before the promotion goes live.
Save Discounts for Key Periods
Discounts can boost your sales, but it isn’t wise to rely on them all the time. If you offer too many discounts over a long period of time, customers will expect you to have them all the time. This is not feasible for any business, so save your discounts for periods when you absolutely need them.
For example, if you know that your sales will slow down during the summer, save your discounts for June. Save your biggest discounts for big shopping days like Black Friday and Cyber Monday. Getting into a habit of discounting your products all the time will negatively impact your profits.
Free Shipping is an Option
If you don’t feel comfortable offering discounts, why not offer free shipping instead? Lots of customers do not like paying shipping fees, so taking them away is almost like offering a discount. To ensure that you are not losing money on this, offer free shipping when a certain number of products are in the cart.
Customers will appreciate the offer, and you can increase sales without having to rely on heavy discounts. Everyone wins!
Set Conditions for Discounts
A smart way to make profits while offering discounts is to set specific conditions for them. Instead of discounting individual items, it might be wise to offer a discount after a certain number of items are placed in the cart.
For example, you could offer a 25% discount for orders that have at least three items in them. You could also supply a 30% discount code to any customers who spend at least $100 on their orders. There’s also the “buy two, get one free” tactic, which has been reliable for decades online and offline.
This allows you to offer pleasing discounts while still moving a strong number of products.
Through our 7cart program, you have all the tools you need to create effective sales and promotions. Interested in learning more?