Making discounts on your products or services

Sometimes it is difficult to decide whether to offer a discount to a client or not and why. This question is often asked by owners of various kinds of business. This might be a retail trade, a wholesaler, an enterprise offering various services to its clients, like catering, hair cutting etc.

There is no common rule for this subject, but there are conditions when the discount policy could work well.

One of the examples is a fashion industry. The rules for casual wear shops are the same — there are autumn/winter and spring/summer collections, which change each other at the end of winter and summer. For companies producing clothes it is more profitable to get rid of the collection, which lifetime comes to an end for at least some amount of money, rather than not to earn anything at all, sending the leftovers to the warehouses, which often are the last destination point of it. So, the discounts are a common thing here. Just look around!

Other example might be the wholesaler selling some food, which has an expiration date. In the beginning the prices for the orders are high, but the closer is the expiry date, the more reasonable for the business owner to start thinking about reducing the price. Of course, the better the business is organised, the less one should think about unsold stock.

The two above mentioned examples have proved the necessity for the discounts because of the seasonality and ability of some products to spoil. These are examples of the inevitability to use the discounts.

However, there might also be the cases, especially in a small business sector (but not limited to it), when discounts are used for raising the clients loyalty. For example, in the catering industry there might be some loyal clients, who visit the restaurants or bars so often that the share of money they bring into the business is significant enough to say them “Thank You” in a form of a loyal visitor’s discount. It is not obligatory, but quite ethical.

The same rule might be applied to bigger enterprises, who receive big orders. The discount in this case might also be a return gratitude to the client.

One more field, where discounts are applied, is promotion of new products. In case you want to present a new pack of juice or a new cocktail in bar, you can create special offers, like 3 for a price of 1, which in some way would be an incentive for buying your new product. Usually such kind of promotion is sponsored by the supplier of a new product, not the reseller.

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