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Did you ever read something that seems as though you had written it yourself? I was reading one of the blogs I like to visit now and then and the topic was negotiating prices with your customers. If you want to get me up on a soap box just ask me about discounting and you’ll have a hard time getting me back down again. I am vigilant about promoting adding value to your products rather than discounting because I have seen it destroy a company time and time again.
The blog was talking about a man who owned a company and his customers were relentlessly putting pressure on him to lower his prices. I can understand that it sometimes seems that if you don’t drop your prices you will lose the business but it is best to make sure that there actually are similar products out there that are priced below yours and that you can afford to sell at that price before you give in. This lazy business owner didn’t do his market research and allowed fear to drive him to keep lowering his prices until he couldn’t make a profit any longer and had to close his doors. He chanced to meet one of his old customers several months later who told him how difficult it had been to find products that were even close to the price at which they purchase them from him before he closed up shop. Though it was far too late to save his business, he finally realized that he should have set his prices at what he needed to make a profit, not what his customers wanted to pay.
If you want to spend a portion of your profits to promote a product, offering a premium is far more productive than a discount because it costs less. In addition, sales incentives actually add value to your product instead of taking it away. Low cost financing make an automobile more affordable without reducing its perceived value. Adding a popular option to a sale at no addition charge works the same way, but sometimes it is better to offer something outside of your typical sales offerings so that you do not lose out on the opportunity to gain that sale as well.
That is where my Sales Incentives come into play. For instance, I do a lot of business with wedding related companies such as Tuxedo rentals and Jewelry stores. They know that after the wedding there is usually a honeymoon and often the newlyweds don’t have a lot of money to take a trip. They don’t want a couple to have to choose between their products and a vacation so it makes sense to use my Travel Certificates to persuade potential customers to purchase their goods over a competitor’s while still holding their margins high.
Profit is what drives a successful business, not sales. Unprofitable sales will put you out of business faster than no sales at all will. The good news, for both of us, is that a well thought incentive program fulfills your customers needs yet keeps your margins high affording you to have what you are working so hard for as well.
Tags: blog, incentives, motivation, pricing, product pricing, profitability, sales incentives, travel certificates, travel packages
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