While discounting is the symptom that needs to be fixed, a full understanding of the underlying root causes that drive this behaviour is key to improving sales performance. Ultimately, management needs a clear line-of-sight to both: does your business have what it takes?
Many companies say that a discount is an investment, but they don’t really treat it that way. There is no analysis of the scale of the investment and the expected return, and when there is, there is seldom any follow-up to see if the return on the discount was realized. In this article, the author outlines several common types of discounting as well as common pitfalls of these approaches and best practices for implementation. Although the examples are B2B and Software-as-a-Service (SaaS) specific, the pricing insights in this article are applicable for pricers across industries.
How can businesses offer discounts while maintaining margin control? The idea is to offer discounts to the public while effectively controlling those discounts based on margin calculations conducted by your team. In this article, the author presents a model for a tool to calculate the maximum sales discount feasible while still maintaining a minimum expected margin.
Companies facing falling demand—for individual products or across portfolios—typically think about increasing discounts and promotions to reinvigorate sales. This is a natural reaction, especially in an economic downturn, like the one unfolding in 2020. But when discount programs are not carefully crafted, the intended sales lift does not occur. In this paper, we outline six key considerations for sales and marketing executives and C-suite leaders when planning and executing discounts. With these considerations in mind, companies can respond to the current demand challenge, while minimizing the risk of unintended consequences.
Subway has long been known for its “five-dollar footlong” promotions, but are these promotions and the volume they provide actually profitable for the company and its network of franchises? In this article, the author examines how discounting and pricing promotions can have catastrophic effects when not well-planned or executed.
In this article, the author examines the pros and cons of discounting strategies and special pricing promotions, including offering insights and best practices for how frequently to use discounts and ways to design them profitably, using humorous parallels from the classic film Monty Python’s Life of Brian to drive home his points in a memorable way.
The media has recently been scrutinizing “misleading retail reference prices,” or the practice of promoting prices as “sales” or “ discounts” when the list prices are actually inflated above suggested retail prices. In this article, the author explores common retail pricing strategies used and the potential ramifications of price misinformation.