When you looked at that heading, did you think ‘no chance!’ Or perhaps you shouted at me; ‘what does she know?’ Certainly, if you are anything like most people in business, you might have some genuine reasons to be sceptical, like:
1. I need to give discounts to win business 2. I need money and I need it now – so even if it’s not that profitable, by discounting I do get some cash flow 3. I’ll raise my prices when I’m busier 4. I don”t know how to justify charging more 5. It’s just easier to give a discount 6. My customers can’t afford to pay more
Well, if that is you, then you need to know that, unless you are in the bargain basement discount end of the market, discounting has been shown not to work. These are the main reasons why:
1. Someone else will always discount a bit more – so before you know where you are, they have undercut you, then you need to undercut them and so on. The result? Even if you do make the sale, you have totally eroded your profit margin.
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