HOME ABOUT US ARTICLES BLOG FAQ CONTACT US
HOME ABOUT US ARTICLES BLOG FAQ CONTACT US
Accounting Software Australia, MYOB, Quickbooks, accounts software, bookkeeping software
Accounting Software Australia, MYOB, Quickbooks, accounts software, bookkeeping software

Articles Blog

Cash Flow tip – Price Discount Strategy – Or should you ADD value?

images/CashFlow.jpgThere are many businesses that use a price discount strategy – especially at the “sales” times. But they also haven’t stopped to think – “to discount or, should I ADD Value?”, and they attempt to gain market share by sales and discount prices alone. The problem is many don’t realise that to maintain the usual gross profit margin (and many small business do not know what theirs is!) will mean they have far too much to catch-up and risk, for a client to expect you to always keep your prices that low. This is how a business can end up going broke!

Generally, consider also that most people believe they get what they pay for.

Discounting Damage

The following table shows what increase in sales are required to compensate for a price discount. For example, if your gross margin is 20% and you reduce prices by 10% you need sales volume to increase 100% or to DOUBLE to maintain your profit! It is not common that such a strategy has worked in the past and is only best left for big businesses who can afford it!

images/Discounting Table examples blog.jpg

Think of the “25% Sale” or “Half-price sale” which can harm your current business and your future reputation with your customers. If you are selling a product or service with a margin of 40% - a “25% Sale” will require you to increase sales volume by a staggering 167% just to maintain the same profitability! Consider – is  a “25% Sale” going to generate a long-term increase of 167%?

Tip 1 - Only consider large discounting for securing long-term contract sales, or to liquidate out-dated stock.

Tip 2 – Can you offer a cheap but high perceived-value item instead of a discount – “I’ll also throw in…”

Discounting Popularity

But discounts and offers DO influence buying, so we can’t ignore their use!

According to an article “In fact, 96% of consumers use coupons and 92% of consumers always look for a deal when shopping. As a general rule, most customers are attracted to buy a product if they see more value in it.

Get a FREE 30 min answer to your query, and FREE ongoing email or phone support – No-one offers as much!

Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Email This email address is being protected from spambots. You need JavaScript enabled to view it. or call 0407 361 596 Australia

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Accounting Software Australia, MYOB, Quickbooks, accounts software, bookkeeping software

CATEGORIES


CUSTOMER LOGIN





Forgot your password?
Forgot your username?
Create an account

YOUR CART

The cart is empty

Accounting Software Australia, MYOB, Quickbooks, accounts software, bookkeeping software

CATEGORIES


CUSTOMER LOGIN





Forgot your password?
Forgot your username?
Create an account

YOUR CART

The cart is empty

Accounting Software Australia, MYOB, Quickbooks, accounts software, bookkeeping software
© Account Keeping Plus 2020   |   Website Design by Best Web Site Design Melbourne    |   Admin