When Do Discounts Make Sense?
Updated: Apr 13, 2019
I have been thinking about this a bit lately and recalling companies that I have worked with and for that offered steep discounting simply to beat the competition and some that held steadfast in their confidence their product was worth the cost.
When do discounts make sense when it comes to your products and services?
Tactic 1: Discounting to beat the competition
We all want to beat the competition but if you are discounting to beat them on price, you either need to revisit your pricing model or look closely at your sales process to evaluate when pricing is entering the conversation.
Tactic 2: Discounting to provide an incentive to your buyer
I see a lot of opportunities with this tactic and it has everything to do with the opportunity to upsell. You can offer a discounted support package or a discount if they sign for a multi-year agreement.
Tactic 3: Discounting to support marketing
For a lot of marketers (if not all), we want case studies, testimonials, customers to announce in press releases, webinar speakers and on and on. If there is an opportunity to capture consent in the agreement, the discount will surely be worth the return.
Tactic 4: Not discounting at all
While there are reasons to justify discounting your products or services, you absolutely do not need to discount. Selling the platform before you get to the price, will defeat your need to discount. Your prospect will be so in love with the capabilities, they will figure out how to find the budget.
TIP: Take a really close look at your competitors and their pricing strategies. Consider your cost per acquisition to ensure the revenue model makes sense. And most importantly, don't settle on price just to get another logo on your website. It's just not worth it in the end.