Increase Your Profits in Three Easy Steps: Part 3 – Stop Discounting

13977484_sDiscounting directly affects your net profits – the money you should be putting in your pocket. Remember that every dollar you discount is a dollar you are taking out of your own pocket. It will not change the cost of the product nor will it change your overhead. No matter what efforts you have taken to make your business more profitable, they will have been wasted if you throw your profits out the door when the time for the sale arrives. Mentally envision yourself handing the customer cash in the amount you were thinking of discounting. This will help you truly visualize the dollars you are giving away.
The long-term effect is even more damaging because once you begin discounting, it only gets worse. Not only will customers begin to expect a discount on every purchase, they will assume that your retail pricing is set arbitrarily high and that the quality of your goods and services may be questionable.
If a customer requests a discount, explain that your pricing is fair and that you do not discount. You will find that this consistent policy will convince your customers that you are not just another desperate retailer looking for a sale at any cost and that they will know exactly what to expect from their buying experience when they enter your store. You will also find that a no-discount policy can have a dramatic effect in aiding your sales staff’s productivity and help you better assess the staff’s sales numbers.
If you want to make this one of your best years ever, starting today, do these three things:
Increase your average retail sale.
Increase your mark-ups to at least 120% on average store-wide.
Implement a store-wide policy of absolutely no discounts (and this means you, the owner, as you are typically the worst offender)
If just one of these three principles is effectively implemented you will see a marked improvement in profits. Applying all three will put you on the path of success you have always envisioned.