Short version: The strategy of discounting is crap.
That’s why I “poup on” Groupon.
Slightly Longer version: The fastest way to cheapen a product or service is to discount the price. And by cheapen I mean devalue.
Do you really want your product devalued?
When you discount you cheapen your value proposition, commoditize it and make it common.
There’s a reason why you never see Louis Vuitton wallets or Cartier watches on sale or discounted. Ever.
You also won’t find coupons or rebates for a Ferrari for the same reason.
When you place too much emphasis on price as opposed to products and service, you’ve eliminated any competitive advantage. If your sole competitive advantage is “lowest price” you’ve already lost.
Especially if you’re a small brand. Big corporations can afford to engage in price wars, they’ve got deep enough pockets to outlast you.
Frequent discounting creates a massive reduction in your profits and sets a bad precedent…
You’ve devalued your brand. Whenever you discount you’re announcing to the world that your products aren’t worth paying full price for. You’ve trained your customer that your prices are always negotiable not firm and once you start discounting they always expect it.
It also creates distrust…
I know a famous “sales guru” who preaches never discount always add value, yet almost weekly he runs a 97% off sale on his products and services. Imagine being a customer who paid full price ($10,0000 in some cases) one day and then saw others getting the identical product for just $300.
And most importantly…
When you’re discounting you’re sending a very clear message to your audience that. It’s telling them that you don’t believe enough in what you’re selling that you think you can sell it for what it’s allegedly worth. (key word= allegedly)
Funny think is, it looks like Groupon is pouping on Groupon’s own business model. They’re moving away from coupons and trying to reinvent themselves as a marketplace. Featuring brands like AMC Theaters, TripAdvisor, Costco and Pandora. These will be alongside mom and pop businesses on the platform. Which given those big brands deep pockets will send a clear message to the small businesses that Groupon is essentially in bed with the enemy and declared war on the same small businesses that they built their business on.
The lesson for you…
Strive to be custom tailored, not off the rack. Differentiate yourself. Stand firm in your price and value proposition then overdeliver on that.
You won’t find me discounting my books very often at all. Like today and darn near every other day of the year for example. This one is a fan favorite and it’s $19.97. Why? Because it’s worth it.