Why You Shouldn’t Discount

by Brendon on June 15, 2005

Howdy. An age-old technique for many businesses to generate more sales is to discount. But I’m thinking you shouldn’t discount.
People discount for 2 main reasons:
It’s easy and it works.
* But does it teach your customers to equate your business with low prices?
* Will they expect low prices next time?
* Does it position your business in the mind of the customer as a business of lower quality? (The research says “Yep, probably.”)
One of my oldest clients never, ever discounts his products. Ever. He positions the business as top quality and this is reinforced to his market by his premium pricing.
The thinking of his market seems to be “We’ll buy there because we know the quality will be top class.”
When often the product is the same as anywhere else.
Bike Store Charges Big Premium
I have another client with a specialist store – we’ll say it’s a Bike Shop (it’s not, but it is a similar industry). He prices his bike at a premium – in many cases he is $200-300 more expensive that the major chains for exactly the same bike.
But the feedback he gets is that people will buy from him because the perception is somehow that because he’s a specialist bike shop, his bikes must be better built/put together better/safer/whatever.
Long Term Value
Discounting attracts the short-term customer only interested in the quick fix.
Premium pricing attracts the customer that provides much better long term value for your business.
Take a look at the customer profiles next time you want to run a discount. Is it really worth it?

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