3 Reasons Why Discounts May be Harming Your Business

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Almost anyone would love a good discount. You pay less money for the goods you want, what’s not to love? And because it is such a good way to attract customers, retailers would often offer it at some point in their business to give themselves a boost. But what happens when you start offering too much discounts?

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1. Devalue your brand

When you have a product go on sale, what message is it actually sending your customers? Most people associate value with price tag. Not meaning to say that there are no cheap, good quality goods, but as a general perception that is how most people think. Discounting and placing a lower value for your item causes your brand to lose its premium image and makes customers wonder if your products are actually worth the original price tag, some may even start doubting your quality for you to have to sell it at a discounted price. Eventually, if overly done, customers will perceive your brand as a cheap, discount brand of low value.

 

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2. Discounts educate customers to only buy when there is an offer

Knowing that your products will eventually go on discount, why would customers want to pay full price? Once you start lowering your prices, it trains your customers to expect to see more the next time. Discounts are an addictive thing and customers may start holding out until your next big sale before they purchase, and more often than not they may grow accustomed to your sales and become reluctant to pay full price anymore, which will be bad news for your business as you now have to constantly slash prices of your items just to get customers to buy.

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3. Customers expect more discounts

People will tend to expect more each time they are offered a discount. This is because once you lower your prices, people will adapt to that new price point and will base their future purchases on it. What is worst is that they may even come to expect you to give a higher discount each time. This is not healthy as you will then have to continually lower your prices to interest them, giving you a lower profit margin each time prices are cut and may eventually lead to you having to sell products at a loss just to top your previous discount.

 

 

Discounts may seem like a quick and easy way to attract customers, and a rather addictive one as well to see that sudden spike in sales, but too much of it may not be the best solution either. Unless if you are a discount store and want to carry that brand image, discounts are not always the best option. Rather, offering your customers items of good value will be more effective to keep your brand image and at the same time keep customers happy with a good bargain.

 

 

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At Visata Creative, we work together with our clients to Design Profitable Spaces.
To us, a bigger space is not always better, what matters most is the profitability of the space. What matters to us is “helping our clients to achieve the highest profitability possible within their retail businesses”. #Viscreative #DesignProfitableSpaces #VisRetailTipsIf you have any burning questions on retail, email us at tim@viscreative.com