If your products are perpetually being discounted, nobody in their right mind will pay full price. I’ve seen the same poor pricing strategy in just about every industry from software to apparel. If you pattern your customer to sale after sale, they will always wait for a sale to buy. And eventually, you’ll sale yourself out of business.
There are people out there saying, “So what if they buy during a sale? We’ll just alter our pricing accordingly to accommodate for the sales we’re offering. If we raise our initial price, the sale price isn’t a big hit to our margins.” Those people are wrong. The customer isn’t stupid, and they will see through this strategy.
Your pricing may be great and maybe it’s even less than your primary competitors, but it can’t be your unique benefit. There is always going to be someone who can sell it as cheap or cheaper. And I’m not saying well-placed (and occasional) sales don’t have their place. I’m just saying that it shouldn’t be your business’s sole strategic approach. Instead, look to companies like Zappos (customer service), Apple (product design), Starbucks (consistent product quality) and Google/GE (innovation) for inspiration. These companies have found something other than price to use as a foundation for building great companies. Brand advocates aren’t built by a sale. Truly avid consumers identify with your product or service and that keeps them coming back for more of whatever you’re selling (not sale..ing).
Or, you can ignore my advice and run Easter sales, Christmas sales, St. Patrick’s Day sales, Secretary Day sales, every third Wednesday sales, left handed appreciation sales, birthday sales, President’s Day sales, Super Bowl sales or any other sales where you can sell your product or service at a discount. Just realize that you’re digging your own grave one percentage point at a time. Differentiate your business with a true benefit and not a pricing strategy. And for goodness sake: ‘sale’ wisely.
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I totally agree with this post. I never buy anything at my online photo downloading website, because I know they will run a sale if I just wait a week or so. All I have to do is wait a week TOPS, and I know I will eventually get a discount code out of them. Same with another retail site I order from. They are CONSTANTLY offering 15 to 20% off with free shipping, so why would I pay full price? But, I have to say, I do stay loyal to these sites since they are always giving me such a good deal.
The problem is that when someone comes along and offers you a better deal you will leave. That’s the issue with basing your strategy on perpetual discounts. Companies that drive loyalty for benefits other than price are much more stable.
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