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Small Businesses Shouldn’t Offer Discounts: Try This Instead

Discounting can be a tempting sales tactic, especially when your small business is trying to drive up sales. What could be more attractive than a lower price?

For big companies that can operate at a loss for years, discounting can be a great tool to help boost sales and encourage more customers to purchase. Walmart, anyone?

When used effectively, it can help them attract and stimulate sales, especially for first-time customers.

But for small business owners, discounting your products and services can actually be detrimental to the long term value of your brand and should be used sparingly, or not at all.

Why?

Reducing Your Prices Reduces Brand Value

Discounting often reduces the perceived value of your product and services.

This can create a race to the bottom, as customers expect discounts every time they purchase. They may hold off on buying anything from you at normal prices, preferring to wait until the next sale comes along.

On national “sale holidays” like Black Friday or Cyber Monday, you may feel the pressure to offer deep discounts when it seems like everyone is offering 50% off everything.

Don’t.

Even if you manage to sell all your inventory at a discount, your small business will only get a temporary rush of bargain customers that likely won’t add to your revenue long term. Such customers rarely come back to purchase anything else… unless you offer an even deeper discount.

Basically, it’s the fastest way to go out of business.

Try This Instead:

Gift Cards: Small business owners can certainly use gift cards instead of discounts as a way to maintain the perceived value of their products.

Gift cards also come with a few other benefits. They can be used to reward loyal customers and give them a sense of appreciation.

Additionally, offering gift cards instead of discounts can help small business owners to better track their marketing efforts and measure the effectiveness of their promotional campaigns. Gift cards can be used to drive sales by incentivizing customers to purchase more or to refer others.

Tiered Pricing and Packages: Offering tiered pricing, where customers buy more and save more, can be a great way to drive up sales. You can also create limited-time bundles and packages, which can help you to increase your average order value.

Free Bonus Gifts and Add-Ons: Offering a free gift or add-on during a limited time is a great way to keep the perceived value of your brand and product high while still providing customers with an attractive offer.

By providing a free gift or add-on, you are adding value to the purchase without having to reduce the price, which can devalue the product or service in the eyes of the customer.

Customers will understand that they have the option to purchase the item at the regular price at any time throughout the year, but the free gift or add-on during the limited time encourages them to act now: Like a reward for being loyal customers.

As a result, customers will see that you are offering extra value, which in turn will increase the perceived value of your brand and product.

In Conclusion

Discounts may seem like an easy way to generate sales, but they can be damaging to your brand in the long run. Small businesses should instead focus on creating increased value for their customers through gift cards, tiered pricing and packages, and free bonus gifts and add-ons. By taking this approach, you can ensure that you’re offering your customers something of value, while also protecting the integrity of your brand.

Now that you know the importance of offering increased value instead of discounts, the question is: How will you apply this knowledge to your business, specifically?

This is strategic marketing territory, by the way. We can help you with that – if you want.

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About Pathbrand

Welcome to our Insights Blog! We're Pathbrand: A Connecticut-based Internet marketing agency specializing in brand strategy, website design and development, and Search Engine Optimization (SEO) for growth-focused businesses. Want more? Sign up to receive tips in your inbox!

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