To discount or not to discount—that is the question that many sales professionals must answer. At first view, it seems that discounting prices should stimulate new sales and be a good thing. But that is not always the case.
The best advice may to be to hesitate and think first. Let’s examine the potential consequences of offering a discount:
– Profits are reduced. Is the extra sale worth the decrease in profits?
– With the pricing precedent set, customers will know to always ask for a lower price since they got one before.
– If your product is a commodity, you may risk the customers buying extra stock at the lower price and keeping inventory. Thus, you loose future sales at a higher price.
– Once discounted, raising prices is very difficult, if not altogether impossible. Customers will presume that this is the new normal.
– Depending on the commission plan, fewer sales dollars will equal less commission.
Alternatively, discounting may preserve the relationship and defend the customer relationship from the competitors. But, is it worth it?
John Bradley Jackson
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