Chances could be pretty good that if you run a business for any length of time, you might have had a sale or two. If you are new to running a business, chances are good that you will have a sale or two at some point.
And if you are like may other business owners, you have had sales that bombed, and you also have had sales that surpassed even your own optimistic expectations. While many business have these types of events, no one likes the to be unpredictable – so is there a formula for when and why to put some or all of your products up for sale?
While there is no set formula, there are at least some things to consider when pricing your items and the reasons that you would have a sale. Here are some suggestions if you are considering a sale or you have had mixed results with them:
First, pay attention to your customer service. No matter how many sales your have or how deep your discounts, bad customer service will doom your business. Every time.
Second, pay attention to your direct competition and try to be a step ahead whenever possible – either providing a deeper discount or starting your sale a little earlier.
Consider the market for your products. Do some analysis for what similar items you sell are being sold for regularly on the market. Don’t price too high before you have a sale price.
Third, Keep an eye on your inventory. Are there products that aren’t selling and you are getting a backlog? Time to slash the prices for now, and maybe reset the regular price so it’s more reasonable to generate sales outside of the sale period.
Add value. Sales do end eventually, so make sure you have value with your products so that even when they’re not on sale, you’ll still get buyers – whether it’s unmatched customer service, wider selection of product, better quality materials, etc. And whatever you offer more than the competition, don’t drop it during the sale. In fact, step it up even more if possible. And yes, if that means losing a little more profit in the short term, so be it. The value you provide during a sale will improve your profit in the long run with return business.
Next, look to when new models are coming in. Always assume you need to make room for the new models, so be prepared to put old models on deep discount. Why? Many businesses have to pay taxes on remaining inventory to a state or federal government, so if you consider how much in tax you have to pay, it might be worth it to slash prices.