Price Discount

Very often businesses offer price discounts to their customers to achieve their sales target or due to competitive pressure. A seemingly small price discount can have a significant impact on profit.

In the example below, a business selling 1,000 units is making a margin of £20,000.

A 5% price discount is offered and margin drops to £15,000.

A 5% price discount has reduced margin by 25%!

To achieve the same margin of £20,000, the business now has to sell an additional 33% in volume. Is that even achievable?

Are you evaluating the impact of price discounts on your margin?

Rather than reduce your price, focus on differentiating your offer and adding value to your product and customers. Sales can then engage buyers in a value conversation and reframe price discounts as a discount to value and take something off the table in return for that discount.

Sometimes offering a price discount is the right thing to do. However, what are you getting in return from your customers?