Small-business Advice: Prudent Discounting

Welcome to the DollarDays Blog! We’re excited to bring you a combination of original features and commentary on the most useful and thought-provoking small-business-related content from around the Internet. Over the next few months, you’ll see us post several stories per week on a variety of topics, including:

  • Small-business advice
  • Small-business expert interviews
  • Small-business profiles
  • Frugal living tips

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Above all, we want this blog to be useful to you. We want it to be a lively community that helps entrepreneurs and businesspeople save money, grow their businesses, get inspired, and have some fun! If you have any ideas on how we can make this blog even better, please don’t hesitate to leave a comment or send us an email.

Meanwhile, for this first post, we’d like to highlight a story we found online at BusinessWeek by Steve McKee that [discusses] the potential downside to discounting. In recessions like the one we’ve been facing, your customers may be strapped for cash, and you’ll be tempted to cut prices to boost sales, but McKee notes that excessive discounting can actually wreck brand value and plunder your profit margins. So how can we discount smartly? McKee suggests limiting discounts to specific time periods or certain customer groups (i.e., students and seniors). Another option, he points out, is to adjust your product mix—carrying lower-priced products but not slashing the prices on your high-end items.

We’d love to hear about your experiences with discounting. How have you used discounts to stimulate sales while protecting your brand and your profits? Or do you have any cautionary tales about the risks of customers who get hooked on discounts and soon refuse to buy anything that’s not on sale?

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