If you’re a business owner, then chances are you’re constantly thinking about ways to attract new customers and make more sales. Even if your business is thriving at the moment, you may be trying to move stock or make up for an earlier period in the year that was slow. Discounting your goods or services is a great option for luring in more customers—assuming you do it correctly. In particular, using a discount calculator can help you make sure that the sale you want to offer won’t hurt your profits. Here’s what to keep in mind when creating eye-catching, effective discounts for your business:
Beware the Effect on Brand Value
Before jumping into the numbers of making business-savvy discounts, it’s important to first understand how discounts can affect your brand image. If you’re putting on sale after sale, customers might start seeing you as a “cheap” discount retailer, even if that’s not the company identity you were going for. That can make it even less likely that customers will buy your regularly priced items in the future. On top of that, studies have shown that buyers view discounted items as less effective and that buyers who paid more expected to have a better experience. To put it simply, you’ll want to be careful with when and how you discount so that you don’t tarnish your reputation.
Figure Out Your Profit Margins
Even if your main goal with offering a discount is to get rid of some extra product you have laying around rather than to increase your sales, it’s still smart to keep an eye on your profit margins when discounting. Offering a discount closes up your profit margin, and you want to be sure that a sale doesn’t actually go so far as to result in a loss. You should see how a certain percentage discount will change your gross margin as well as how many more sales you’d need on the discounted items to break even or profit.
How a Discount Calculator Can Help
When working out all this business math, a free online discount calculator by GIGA Calculator is a useful tool for making your assessments. With this calculator, input the original price and the percentage discount you’re thinking of offering. Then, you’ll see what the discounted price is as well as the dollar amount of savings. In the case of a business owner’s perspective, this dollar amount is how much less you’ll be making from the sale of that one item. You should be sure to figure out that even without this income, you’ll still be able to cover your costs and make a profit.
Framing Your Discount
Once you’ve figured out the right discount percentage to offer, you’ll need to decide how you want to advertise it to the customer. You don’t have much time to grab the attention of a prospective buyer and even the slightest changes in wording or presentation can affect how someone understands your discount. Depending on the cost and perceived value of your product or service, it may work best to write the sale as “XX%” off or as “$XX” off. This is something you’ll have to test on your own to see what works best!
When creating discounts to intrigue more customers, remember to first take a minute to review your profit margins and use a discount calculator to ensure you’ll still make a profit. You should then frame your discounts in a way that most entices your target customer base so that it can hit home and reel them in.