Are you a salesperson who thinks giving a discount is the easiest way to make a sale? This may be true in some aspects but what about the profit you may be giving away? For example, if your profit margin is 30% and you’re giving a 10% discount to make your sale, you’re actually losing a massive ⅓ of your available profit. In this blog, we will explain profit vs discounts and how you can boost your business by avoiding too many discounts.
If your job is to sell or whether you have others selling for you, you should protect your price and your margins at all costs. Be sure to teach your people not to hesitate or stutter when a customer insists on a lower price, be quick to negotiate. You should start using tactics to hold firm on your prices. You should sell value, whether that be the perceived value or the real value.
Selling value
As we all know, realistically, we can work 50% less for the same income. But in business, this is very different. So, suppose your company sells desks, priced at £350 per unit. The net cost per unit is £200. This means that the net profit from each desk sale would be £150. Therefore, if you sell 10 desks for the full price, the net profit from these sales would be £1500. Thus, if you then compare this to selling another 10 desks at a 10% discount, the net cost stays the same, but the net profit will have decreased to £1350, compared to £1500 with no discount given. This may seem like a small loss, but if you were to scale this to much larger sales, your profit would decrease by tens of thousands.
Little and often soon adds up
Ultimately, if you constantly offer 10% discounts across your products or services, this means you’ll need to sell 50% more to receive the same profit. So, a 10% discount, as small as it may sound, actually means that someone needs to work 50% harder to earn the same profits for the business.
If you need help managing your net costs and profits, ActionCOACH Loughborough can help! Contact us today.
