When business is slow, having a ‘sale’ can be a great way to get things moving again. ‘Sales’ can be helpful to increase revenue and awareness of your business, however there are a few factors that need to be considered before you start discounting items to ensure that you still make a profit.
As it is important in business to make money, it is critical to fully understand your current profit margins, mark-ups and breakeven point. Without these figures you will not be able to predict how discounts will affect your profit.
If you are unsure how to work out these figures then this guide from the Victorian government could be of help.
Remember that there are different types of sales that you can implement, other than discounts, which will attract customers. For example, you could offer your customers something additional for free such as gift wrapping or an instruction guide. However, always remember to factor in the time you need to spend on any extras, as your personal time and services are valuable too.
Undertaking in-depth research will help you to understand exactly what type of discount strategy will attract your target market. For more ideas and a great graph that shows how discounts affect your profit margins check out the Business Victoria website.
Incorporating a sales plan into your marketing plan will help you to stay ahead of the game and track your progress.
If all the numbers and figures are a bit overwhelming, then talk to one of the Small Business Smart Business mentors for advice from an industry experts. A 1.5 hour session will only cost you $50 and could set you up on the road to success.