Starting a new business is a big undertaking, especially when making financial decisions like product pricing. You want to price them fairly so you earn the money you deserve and compete with other businesses. One way you can compete with other businesses is to offer occasional price discounts. When should your business offer these, though? How much should you discount the items? And other than staying competitive, what are the benefits of doing so?
Scheduling Price Discounts
Different businesses offer price discounts at different times. Many of these price discounts coincide with a holiday when people are off work. When people aren’t working, they can shop at your business, and a discount will entice them even more. Holidays such as New Year’s, Mother’s Day, Juneteenth, Thanksgiving, and Christmas are all popular times for price discounts.
Other than holidays, you can time your price discounts based on inventory. If you have a lot of stock that you need to get rid of quickly or you’re trying to encourage customers to try a new product, offer a sale.
Calculating Price Discounts
Once you know when you put products on sale, you can calculate how much of a discount to provide. First, double-check that you’re pricing the products in your inventory accurately. Otherwise, what might look like a sale to you may feel like full price to customers who typically shop elsewhere. If shoppers feel that way, they won’t buy.
After double-checking your regular price, you can calculate the sale price. A discount of 30 percent is often enough to entice people to buy without you losing out on profit. If you need to clear up space for new inventory, you can offer other deals such as buy one get one 50 percent off. You’ll need to choose your discount based on your finances and inventory.
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Benefits of Price Discounts
We mentioned above that selling items at a discounted price allows you to compete with other businesses. People often buy the least expensive version of a product they can find, so they will choose you over your competitors if your prices are more affordable. However, price discounts can also bring in new customers, build loyalty in existing customers, and increase brand awareness. Even when you’re not worried about competitors, offering an occasional price discount or sale can help you reap these benefits for your business.
Your business should offer price discounts when you need to get rid of inventory, beat competitors, or entice new customers. Calculate a fair discount price that people will want to take advantage of and watch your business thrive during your sale.
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