Why Discounts Are Bad for Business?

When every other company is offering sales and discounts, it can be tempting to give away your products for less than you originally intended. However, strategic pricing with an eye on the long game is essential for any business. Instead of cutting prices, businesses need to strategically think about how they want customers to view their brand and what that will cost them. Giving away things for cheap doesn’t feel good at the moment, but has a ripple effect on your operation and can hurt brand perception in the long run.

Why are discounts bad for business?

Discounting is a short-term solution for a long-term problem. Discounts are a quick fix for a dip in sales. However, the more you rely on discounts such as Ocean State Job Lot senior discount, the more customers expect them. And when they don’t get them, they might shop elsewhere. A downward trend in sales might be due to several factors. It could be that customers are experiencing a change in their buying cycle, and they aren’t buying from you when they normally would. Discounting can also harm your brand.

Customers expect constant sales

Customers expect sales. They want them, and when they don’t get them, they feel slighted. A study by the University of Wisconsin-Madison found that when customers expect sales and don’t get them, they’re more likely to shop at a different store. When a brand has sales, the customers expect those sales to last for a short period. However, businesses that rely on constant sales run a risk of alienating their customers.

Now, there’s a difference between having sales and having constant sales. When you have sales, they are a one-time event. They last a few days, and then they’re over. When you have constant sales, it’s more like you have a sale every week.

Discounting can erode brand value

Discounting can erode brand value. The MIT study found that customers associate the brand with discounts. It’s not just the product they are buying; it’s the discount they got on it. When a customer buys a product that they expect to last a long time, they have high expectations. If a product breaks within a few weeks, the customer is going to be upset.

However, if the customer bought the product when it was on sale, they might not feel as disappointed or annoyed. When your customers are expecting a low-quality product, even if it does work for a short period, they’re going to be upset. However, if they bought it when it was discounted and is still under warranty, they might be less likely to complain.

It can damage your supply chain

Discounting can damage your supply chain. Customers expect a great deal, but they don’t necessarily expect a high-quality product. When you’re discounting products, sometimes you have to source lower-quality goods that are more likely to break during the normal course of use. When customers receive a product that breaks after a few uses, they’re not going to be happy.

Final Words: the importance of branding

When you start discounting products, it’s easy to send the message that your products are low-quality, and customers are likely to believe that. A study from Cornell found that people associate a higher price with higher quality. When you create your pricing strategy, you need to think about how each item impacts your brand.