 BUSINESS 4NETWORKING [The old conundrum] |
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Posted on 19th Nov 2008 at 16:58
Something we discussed at Stevenage 4N this morning: when do you use price promotion to turn the key to sales?
Nobody wants to be panicked into cutting prices if they don't need to, but how long do you hold on before you go for it? Is there a magic formula for deciding or is it down to your individual nerve?
Some companies always seem to have a price offer on - BOGOF, 20% off, etc etc. Other companies say they don't discount because their prices are already keen. Then there is the John Lewis "never knowingly undersold" line.
Which approach do you take and why?
Shoes Galore Letchworth
01462 481757
sgletchworth@ntlworld.com
www.shoes-galore.co.uk
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Posted on 19th Nov 2008 at 17:24
Most of my 'products' are highly bespoke, and therefore priced and specified exactly for the client. As a principle, I prefer to emphasis quality and added value before I go down the cut price route.
It does concearn me a little that some businesses are on a price cut drive that will lead to profitability issues for them, and I have no interest in getting into that world.
However, one has to have some humility and be ready to negotiate! So I do, if appropriate!
Paul Norman 4N North Tyneside and Oxford
Gibside Associates - a different approach
www.gibside.co.uk
Training for business with, no jargon. Consultancy that makes you think. Helping you be deliberately excellent.
Check here for training courses that might just suit you!
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Posted on 19th Nov 2008 at 18:36
It's a very difficult one this. Dropping prices doesn't necessarily increase sales and it makes earning as much profit harder.
Price elasticity is an entire course on its own, and it varies from product to product, market to market.
Don't let fear stop you from ensuring that customers fully appreciate the value/perceived value you offer. Then you've always got a chance of earning it.
Jon Dean
Sales Training - Marketing Services
I'm the only person you'll ever work with who will guarantee to make you money. (Probably because no-one else is mad enough)
Where to go to get Free Stuff:
The Jon Dean Email - Essential business opinions & trends for every executive or entrepreneur
The Seven Secrets of Successful Sales Training - Don't book any Sales Training without it
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Posted on 19th Nov 2008 at 19:23
But what if the product is great, the customers appreciate that it is great and they still don't buy? Do you blame the credit crunch? Is the way to get their hands in the pockets to run special offers? Or do you just trust that you will find the right prospects? Like I said, isn't a lot of it down to holding your nerve, a bit like playing poker? And like poker, do you have to know when to fold (reduce prices?)
I believe my shoes are excellently priced for the quality and the fact that they are limited editions. But when I have an event where everyone coos over them but nobody buys (rare, admittedly) I immediately think of discounting. I haven't done it yet, I don't think I need to actually, but if I had night after night of it I would have to seriously consider it.
I just wondered how other businesses come to their decisions. At what point does any sale become better than no sale?
Shoes Galore Letchworth
01462 481757
sgletchworth@ntlworld.com
www.shoes-galore.co.uk
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Posted on 19th Nov 2008 at 19:25
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Posted on 19th Nov 2008 at 19:26
I always recall speaking to a competitor of ours selling the same equipment but at double the price and saying to him 'you must find it impossible selling against us and he said to me but I only have to sell 1 to every 2 of yours.
Rather that reducing the price why not offer them added value ' metallic paint' or 'Chrome wheels' etc. to used the car salespersons line (Don would you like to give us a lead on this?)
Dave
David Thomas
Oxnews.co.uk
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Posted on 19th Nov 2008 at 19:26
Hotel rooms are highly price-sensitive. Also, they are a limited resource that can only be used "tonight". Right now, hotels that don't discount have a lot of empty ones!
Know your cost, know your competitors' prices, fit between those 2 numbers and get the rooms filled. Once the customer is in the building there is plenty of opportunity to sell food & drink, but the customer who stays somewhere else = zero revenue.
January 4N Member Offers:
"DB&B for the price of B&B" or "Dinner for 2 with Free Wine" Click here for details
A Hotel for Business or Pleasure (but better for BOTH!)
01404 831278
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Posted on 19th Nov 2008 at 20:28
That Steve, is the juggling act we all need to become excellent at doing. No customer = no revenue. Full order book = ability to say, no discount.
And it varies from day to day how that may be. There is no simple answer, but clearly flexibility is important. But I avoid discounting too quickly, or too early. As I suspect do most hotels!
But there reality check you give us is right, and appropriate.
Paul Norman 4N North Tyneside and Oxford
Gibside Associates - a different approach
www.gibside.co.uk
Training for business with, no jargon. Consultancy that makes you think. Helping you be deliberately excellent.
Check here for training courses that might just suit you!
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Posted on 20th Nov 2008 at 09:41
I'm fortunate that I have a unique product and all Herbalife disrtibutors charge the same price. so the customer buys from the distributor that looks after them best, I occasionally discount as a reward for finding me ex amount of extra clients, but the discount is usually in the form of an extra product that they may upgrade to next month.
I had a conversation with someone a while ago, who had a stables and charged what she thought was a competetive rate, but had no business, she spoke to a friend who had a thriving livery stables, she told her she was too cheap and people perseved that for the price, she would be no good. she doubled her prices and is now having to turn business away as she is full.
0121 244 2968
www.FitnotFat.net
www.PositiveFuture.net
Independent Herbalife Distributor
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Posted on 20th Nov 2008 at 09:56
yeah Mick, I think you should start doing BOGOF now!!!!!!!!!!!!!!!!!!!!!!
Lisa, why don't you use price promotion on a samll part of your range, to attract people and then they may buy other non-promotional; stuff they like. EG, with me, I may do a disocunt or BOGOFF on a slower moving product or a seasonal product and I usually find that peopel are attracted to the offer and end up buying other non discounted products at full price.
Dean
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Posted on 20th Nov 2008 at 09:58
Quote:
yeah Mick, I think you should start doing BOGOF now!!!!!!!!!!!!!!!!!!!!!!
Lisa, why don't you use price promotion on a samll part of your range, to attract people and then they may buy other non-promotional; stuff they like. EG, with me, I may do a disocunt or BOGOFF on a slower moving product or a seasonal product and I usually find that peopel are attracted to the offer and end up buying other non discounted products at full price.
Dean find me 5 new customers on full weight loss programs, and you can BOGOFF! ;-}
Hey Maybe I could offer a free calypso product as an incentive?
0121 244 2968
www.FitnotFat.net
www.PositiveFuture.net
Independent Herbalife Distributor
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Posted on 20th Nov 2008 at 10:00
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Posted on 20th Nov 2008 at 11:44
Quote:
My MD said to me this week "your belly's gone"...
LOL!
Helen 
'Styling to Sell, Styling to Rent, Show Home Furniture, Interior Re-styles & Refurbishment'
M: 07789 488446
DL: 01225 330088
W: www.propertystylingcompany.co.uk
4N Group Leader 'Brilliant BATH'
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Posted on 20th Nov 2008 at 13:42
Pricing is a great topic and one I've studied a lot.
Competitive discounting is always a problem as there is always someone who can charge less, so you end up in a price war and have a commodity product. A 10% variation in price has a much bigger impact on profit margin. It's also a lot harder to push prices up later.
If people won't buy what you have at the price you want, then they do not perceive enough value in your offer. So you need to demonstrate value, like:
total lifetime cost - my shoes last longer, can be resoled -
or some premium - fitted to your individual feet, personalisation/customising -
or demonstrate the cost as something else - 'avoid aching feet for just £1 a day' -
or add more value that doesn't cost you much or anything - a spare pair of matching shoelaces.
I'll shut up now
Flightbyte Computing
- your computer GP
01865 748197
07906 218776
www.flightbyte.co.uk
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Posted on 20th Nov 2008 at 14:51
Once you start discounting it is very hard to get away from it.
Added value ideas as those mentioned above + here's a couple more
A gift voucher from you redeemable against their next purchase or assignable to a friend who buys at full price
One of those £0.99 kiwi buffer pads as a complimentary gift - stick your label on the top. Everytime they polish their shoes they'll think of you.
Chris Slay, Director | Specialist Provider of Polish Jobs | 07977 131 389 | enquiries@skillsprovision.co.uk
Skills Provision Ltd is registered under the Gangmaster Act 2004
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