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How Sale Prices Will Kill Your Business

November 29, 2013
Upstruck

Photo courtesy of Atomic Taco

Years ago, I had a stint as a UPS guy. My delivery route was a bigass shopping mall.

I didn’t have the “brown truck” like most UPS guys — I had a semi truck that I shared with three other people. We parked it in the mall’s loading dock each morning, delivered packages all day until it was empty, and then filled it with outgoing packages we picked up afterward.

Black Friday was hell. It was only after I got involved in marketing that I understood just how bad it really is though…

People of Wal-Mart

A search for “black friday” on Google will get you plenty of photos, videos, and stories of people acting like idiots.

You’ll see things like this, which shows shoppers in my home state, Tennessee, fighting over Rachael Ray cookware sets for $89, marked down from $199…

And by looking at these photos, videos, and stories, it’s easy to think “I’m different.” Or even worse, “My customers are different.”

You’re not. They’re not.

The Problem With Low Prices (and Sale Prices)

I used to send a weekly newsletter to my list. The first part was helpful marketing information and the second part was a “deal of the week” with one of my products available for a reduced price.

In my mind, this worked great because, if I needed to sell more of something, it was easy to do by lowering the price and announcing it through the newsletter. Plus, people got a “good deal.”

I did this for months, maybe even a couple of years, until one day I got an email from somebody asking, “What do you have on sale this week?”

That was when I decided to stop.

Why? Here are a three reasons…

1. Sales Don’t Help People – If a person needs something he needs it now, not later. But he’s not going to get it now if he think you’ll eventually drop the price and her can get it for less money later.

Yes, while some people will buy something they wouldn’t normally buy because of a sale price. However, if they don’t need it or won’t get around to using it, even though you might make a little extra money in the short term, because that money is not in service to your customer, you’ll make less money in the long term.

Beyond this though, “price buyers” aren’t quality customers and have no loyalty. They’re like dating a high-maintanence women — no real commitment, constant hand-holding…

Do you think any of the women above care that they’re at Wal-Mart? Do you think they wouldn’t have driven to a K-Mart across town to save $10 more?

2. Sales Devalue Your Product – Your relationship with customers is a two-way street. People value what they have to work for. If you don’t want your product thrown away like a cheap cookware set, don’t price it like a cheap cookware set.

3. Sales Devalue Your Business – What are you, Wal-Mart? You’re not running a “something for nothing” business, so don’t train your customers to treat it as such.

Want to see a “Black Friday” deal done right? Look at Apple. This year, they didn’t drop prices on anything. Instead, a full-price purchase got you a gift card between $25 and $150.

Do you have a similarly valuable bonus you can offer your customers? If you’re looking to increase sales volume, that’s where I’d start.

ABOUT THIS SERIES: Every Friday, I give tips on how to build the foundation needed to have a successful business and platformSee other posts in this series here and, if you have a request for me to cover something specific, let me know via Twitter.

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