Black Friday has been and gone. The emails have stopped. The banners are down. And somewhere, a business owner is looking at a busy sales week and feeling pretty good about it.
I'd like to ruin that feeling a little bit. Sorry.
It's scary how much damage deep discounts can do to a business. They bring a rush of cash in, and cash coming in feels like success. But is it always a good thing?
The short answer is no. As the old saying goes, revenue is vanity, profit is sanity.
The maths nobody does
For a lot of businesses, even a 10% or 15% discount on the selling price can wipe out half of the margin.
Say you sell something for £100 and it costs you £80 to make and deliver. You keep £20.
Now knock 10% off. You sell it for £90. It still costs you £80. You keep £10.
You've taken 10% off the price and lost 50% of your profit. To make the same money as before, you now need to sell twice as many. Twice the orders, twice the work, twice the stock, twice the customer service emails, for exactly the same profit.
If your margins are tighter than that, it's even worse. A big enough discount means you're paying for the privilege of being busy.
And there's a hidden cost too. Every time you discount, you teach your customers to wait for the next one. Do it often enough and your full price starts to look like a rip-off, even when it's fair.
Add value, keep the price
So what's the right way to do a special offer? Increase the value you give your customers instead of slashing the price.
Add something to the order. A bonus product, an extra session, a free upgrade, faster delivery, a gift for a friend. Pick something that's worth a lot to the customer but doesn't cost you much to provide. A service business can add time, support or a bit of extra expertise. A product business can bundle something that's slow-moving in stock.
Your customer gets more than they expected. You keep your price and your margin. Nobody learns to wait for the next sale. It's a proper win-win, with happy customers and a profitable business.
I'm not saying you should never discount. Sometimes there's a good reason, like clearing old stock or winning back a lapsed customer. Just make it a decision you've done the maths on, rather than something you do because everyone else is.
Before the next big sales event comes round, sit down with one number. Work out what your margin actually is on your best-selling product or service. Then work out how many more you'd need to sell at a discount to make the same profit.
If that number scares you, start planning an offer that adds value instead. You've got a year.
