To Discount or Not To Discount
Posted March 29, 2015
I’m still in the process of nailing down exactly what my business model is but I’ve worked out a few things that shape the sort of business I want to have. Transparency is a cornerstone for me and as a result I’ve chosen to not offer discounts. Seems like a strange leap but bear with me and I will explain how I got there!
The basis of offering discounts in business is made possible by being able to save money from bulk purchasing and then passing that on to the customer. Another situation could be is that you sell goods with an expiry date and you just want to receive something before you have to dispose of them.
As my business is based on selling finished products handmade by myself, rather than selling finished products made by others, there is no bulk purchasing involved and therefore no savings in the form of a discount to pass onto the customer. In the same vein, being asked for a discount for buying more than one item also doesn’t work as again, there is no initial bulk purchasing occurring.
Additionally my work doesn’t go off so if there is a piece that isn’t moving, I take it apart and make something else out of it. Some great new work has come out of this process!
But the main reason I don’t discount is that there has to be an inflated price at the beginning costing stage in order to accomodate a discount down the track. That’s the part that I don’t think is fair – some people pay the inflated price and others don’t. By calculating one price for everyone at the outset I find it's a fairer way of doing business.
However I do realise that an element of discounting is a way to recognise customer loyalty, which I believe is a very important part of small business. So while pondering this aspect of my business model I have decided that straight up giveaways are the way I choose to acknowledge customer loyalty. Each month subscribers of my newsletter, The Circular, can email me their interest and be in the running for that particular piece being given away.
Featured giveaway for April - Moonscape Ring, oxidised sterling silver
I’ve found it a really interesting exercise to work out how discounting fits in my business and my take on discounting is exactly that – my take on it. It’s in direct relation to my business and how it works and I recognise that there are plenty of businesses out there where discounting is an intrinsic part of their business model. Have fun working out the way you want to operate!!
Comments
Post new comment