Promotions and discounts as a method

Questions from "The Question":

How to attract customers with the help of promotions and advantageous offers not at a loss?

About promotions - there are several models that will help you "stay afloat":

  1. Minimum price - if you need to attract customers, and there is no other tool at your fingertips, you can calculate the minimum allowable profit on a product or service, and thus make the appropriate discount. This way, you will get less than what you would normally get for a single product, but by attracting a lot of customers, you can make up for it, or even get a higher total profit than without the stock.
  2. Trial product and demo access - if your customers find it difficult to make you buy a product. For example, it's new and they don't trust it. It is possible to provide a free "tester". It works in the following way - you calculate how many copies of the product are allowed to give away free of charge (the allowed costs that you assume) based on the number of sales of the product after the trial (which will cover the costs). This is a complex and risky model because you need to be sure of the product and its attractiveness. If people don't appreciate - there will be no increase in sales after the "sample", which means that you just suffer losses;
  3. Commodity balances - this method works primarily for stores and physical goods. The fact is that the cost of warehouses, if some goods were poorly sold, may be more significant than the losses from selling the goods themselves at a low price. Here you can follow two tactics: a) to make the price with a minimum profit - then you and the commodity balances "clean up" and earn. b) to make the price close to the cost price or even lower (huge discounts up to 60-70% usually signal this approach) - then you will not be able to earn on the goods themselves (you will go to zero, or even minus), but you will reduce the cost of stock, and will be able to place a new product (which will allow, if it is "hot" and popular, to compensate for losses at its expense).

Now a few words about profitable offers.

  1. Discounts are not the only way to attract. Another option is to offer additional services together with the goods for the same price. That is, if 2-3 positions will cost at a price of 1. Here the math is simple. Usually, to the basic product or service added "secondary" and cheaper. By making a small discount on the base product, and a discount on the secondary we get exactly the same price for one product. In this case, the discounts are actually summed up and may not be so significant. As a result - you have a profit, the client has a really advantageous offer.
  2. Affiliate programs are also a good method of attracting customers. And not only in terms of mutual advertising. If there is an opportunity to add your service to the product of another company (or vice versa), you can again make a discount on the service, or even use such a solution as a demonstration of the "sample" for free to the audience of the partner. Benefit - you can increase your audience at the expense of your partner, and he - at the expense of yours, and this will lead not only to direct sales, but also to new customers.

In general, there may be many other options, but it is better to consider them on a particular business. So try it, come up with new options and just count. And most importantly - do not only calculate the profit for each unit, but the overall financial performance in the business. This approach allows you to give something even for free, compensating with another product or other global processes in the organization. And in general, to increase sales volumes.