How many of you wait until something goes on sale to purchase? I’m sure a number of you answered “me” to this question because I’ve done the same. One of my favorite clothing stores has sales so often that when something is not on sale I refuse to purchase from them because I know there will be a sale the following week. I’m certain there are many frequent shoppers of this particular store that think the same way.
Sales are a great way to introduce a new product or service, spark interest in new customers, show customer appreciation, and gain repeat customers. I’ve seen entrepreneurs use sales as the sole source of gaining new customers; this can be detrimental to your business for a few reasons.
- Most of your clients will be paying your sale price, therefore you are less likely to make the amount of profit you set in your financial goals
- You are less likely to get new clients when you aren’t having a sale
- Potential customers may be turned off because some believe discounted prices means discounted service
A sale should be strategically planned, below are 6 things to think about we marking your products and/or services down.
- Is there a purpose? (Holiday, customer appreciation)
- Will you still make a profit?
- What is the duration?
- Who qualifies? (New customers, existing customers)
- Have you had more than 4 sales in one year? (If yes, reconsider)
- Will this benefit the business?
Although entrepreneurs shouldn’t mark down their items frequently there is one exception to this rule. If you are a product-based business and you’re working on getting rid of old inventory it is acceptable to have a frequent sale on those items. For example, if you own a clothing store and sell swimsuits during the summer and the seasons are changing, marking down the excess swimsuits that did not sell to get rid of the inventory is acceptable.
It is important to keep track of the sales you have because too many deals ultimately end up as no deals for you as an entrepreneur because it drives down your profit. When creating your yearly budget make sure you budget for the sales you plan to have through the year.
Let me know your thoughts on this post. Do you think having too many sales can be detrimental to a business?