To Discount or Not to Discount… That is the Question
March 27th, 2017
“I got a great deal on it!”
“It was on sale!”
“Thanks! It was a steal.”
You’ve probably heard variations of that theme on more than one occasion. And most of the times I hear those types of exclamations, the exclaimer is talking about an indulgence: A handbag, a pair of shoes, a great outfit.
I never hear someone excited about getting a great deal on apples, for example. Or on something from the butcher’s counter.
That doesn’t mean we don’t still like to save at the grocery store… But our savings tend to be in the aggregate, rather than on an individual basis. “I saved $13 on my grocery bill this week! I love coupons.” Or, “I only shop at XYZ Store. They have the best prices.”
When we purchase something that feels like an indulgence, we tend to like a direct discount. It makes us feel like we’re getting a deal.
But when we’re purchasing something required, we don’t necessarily want to cheap out on the item itself. Instead, we look for overall ways to save. We shop at a particular place, or we seek out discounts unrelated to the underlying item.
Does your creative practice feel more like a luxury purchase to your customers? Or does it feel like a necessity? Understanding your customer’s point of view (and knowing who those target customers are) can help you use the psychology of pricing strategies in an effective way.
Next, it is important to understand your objective when it comes to discounting. Why are you doing it? Is it to boost sales? Is it to move older inventory? Is it because you enjoy the process of haggling? Is it because you want to reward a customer for his or her repeat purchases from you? Is your discount program a loyalty program? Is it because you want to reward a high-volume purchaser (or encourage high volume purchases)?
By understanding exactly what you want to get from offering a discount, and making sure your goals are aligned with your customer’s objectives, both parties can win.
And as long as you have enough wiggle room built into your target prices (for your time, for a project, or for each individual piece), you can figure out exactly how much of a discount you can provide… Without going below your minimum price for a piece, your time, or a project.
Join us for a free Pricing Webinar on March 20, 2017 at 3:00 EDT.
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