Help Your Business Grow with These 5 Discount Pricing Tips

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Discount pricing is a double-edged sword. When done correctly, it can drive revenue via sales that may have otherwise been lost. On the other hand, the wrong discounting strategy can unnecessarily cut into margin.

Improper discounting also carries the risk of doing long-term brand damage. From Pizza Hut to JC Penney, there are lots of large companies who ruined their brand reputations with the wrong discount pricing approach.

Since even the best rates from a credit card processor can’t save a business that cuts too deeply into its own margins, we want to share some best practices for discounting.

1. Don’t Compete on Price

Although this is easier said than done, focusing on elements other than price can help define how your business approaches discounting. Since a race to the bottom is the last thing you want, thinking about every angle, from branding to new feature launches, will help you avoid the temptation of using discounting as a crutch.

2. Create Limited Time Frames

Malls have had a rough couple of years and it appears 2017 is going to be even worse. If you walk through any mall, you’ll see numerous retailers advertising discounts and sale prices as high as 40 percent off. While that can be an enticing deal, it’s problematic when retailers begin using this deep discounting a few times a year to making it their new normal. That quickly trains consumers not to buy unless there’s a sale. You can avoid this type of pitfall by creating limited time frames for your discounts you can actually stick to.

3. Consider Upsells

When done well, upsells are a great way to increase average order value, while also providing customers with great deals. The basic idea behind this strategy is to offer a customer that has just placed an order a relevant item at a special price. Instead of undercutting the value of what you’re selling, upselling can actually add to it. And thanks to the growing popularity of this tactic, there are now a number of apps that make it quite easy to implement and customize an upsell funnel with any of the major ecommerce platforms.

4. Utilize Bundling

Similar to upselling, bundling multiple products is an effective way to entice consumers with a discounted price. Because the discount comes from the fact that someone is buying multiple items at once, it doesn’t hurt your brand reputation. Plus, seeing a discounted price for a bundle of items can magnify the deal and savings you’re offering.

5. Implement an Email Discount Ladder

Collecting email leads is a must for any business that sells online. The mistake many businesses make is collecting addresses and then never emailing them. Be more strategic – implement an email discount ladder that can help your customers save, while bringing you greater revenue. Most email marketing software can easily handle this type of workflow. Simply choose a set of intervals, anywhere between 15 and 60 days after initial contact, and then offer an increasingly larger discount to your recipients with each email. If they make a purchase, the ladder will end. This very personalized approach to discounting is very effective, just be sure to include language indicating when the discount offer ends, and that the deal is only for a limited time.

With these simple steps, you can harness the benefits of discounting and avoid any potential downsides. Get started – see what credit card processors we recommend and how they might be able to help you and your small business earn more cash.

Posted on Thursday, May 4th, 2017