It gets to me every. single. time. I receive an email in my inbox from one of the brands I really like. It announces a discount. On top of an already existing discount. On a unique, newly launched product.
My consumer heart should be singing. Unfortunately however, it is not. My pricing heart is bleeding and that one wins – been in this trade for too long it seems.
Discounts can be a powerful tool to make more money and attract new and more customers. Except when it is used too often or in the wrong way.
What it then does, is quite the opposite: it destroys value. Value for the owners of the business. Not just once but four times. Four!!!!
Let me explain.
Number one is the obvious one: more discounts means less profit. Fine. (Well actually not but I am trying to stay calm here.)
The second value lost is brand value. This unique, special brand with amazing products, nowhere else to be found, made with an incredible amount of tender love and care is losing value if it can be bought so cheap. ‘Cos how can it really be so unique if you can buy it so cheap?
Then there is the value of the health of the owners of the business, pouring out tons of tender love and care into their products, their customers and their dream. Less profit means more work. More work means less time. Less time means less dreaming. And potentially much worse.
The final one is this beautiful business’s long-term profit horizon. You see, as much as I love this amazing and unique brand, I learn quickly. As a customer, after the third email announcing yet another discount, I learn how to wait. Wait for the good stuff to come at half – or worse: less than half – of the price. That means that this beautiful business looses even more profit in the long term from a customer who would be able and willing to pay the full price. Because I see and appreciate the unique value of this product.
I see this happening all. of. the. time. With brands I love and appreciate. Making products that are truly unique. Because of these business owners who pour in so much tender love and care.
My pricing heart bleeds.
Because it could be so different. These unique brands could produce less, sell less and yet, make more money. Though I understand it can turn into a numbers game of bigger, better, faster, that is just NOT the right way forward for small unique businesses… or for our planet for that matter.
Call me, email me, come over for coffee if you agree and want to do something about it!
This post is also available in: Danish