When promoting products and services you need to be sensitive to the huge impact that discounting can have on your bottom line and customer satisfaction.  Many people view discounts or promotional offers as a quick and easy way to boost revenue.  You need to adapt a more long-term mindset to realize the impact that discounting can have on your business model and ability to generate revenue.  Discounts are an excellent way to increase awareness, drive sales, and create hype for your product… but they must be used sparingly and need to align with your goals.

The drawbacks to running discounts frequently

• Potential to upset former customers

  We all understand (or I hope we do) that businesses run discount pricing promotions for their products.  However, you need to know how your former customers will react to the promotion.  Imagine you bought a product yesterday from a company, only to find out today that they are running a special for half off.  This can leave your past customers with a feeling of resentment and discontent.

• Lowers your perceived value

  Not in all cases, but if you discount your products heavily – it will change how customers perceive your products.  Instead of being a premium product with a premium price, you are knocked into the next bracket because of the way people perceive what you offer.

• Can reduce overall sales

  Running discounts or promotions too early can condition your customers to only buy from you when you run a special.  A great offline example of this is your local grocery store or department store – how many times do you only buy certain products when they’re on sale?  You would be surprised how many of us only visit certain stores when they are running promotions.  This applies equally as well online for your own products.

• Your profit is smaller

  If you have become to selling your product at a certain price, when you lower what someone pays for that product – you are also lowering your profit margins.  So now instead of needing to sell 10 items to make the same amount of money you were before, you must now sell 12 in order to realize the same profit (or whatever your discount might be).

The next time you want to run a special discount or promotion think about these points and make sure that you’re not putting yourself in a hole that will be difficult to dig out of.