Here’s how to avoid the dreaded discounting trap in your small business

Friday 24 February, 2017

As business owners we often feel compelled to reduce prices in an attempt to compete with competitors. This can be a quick way to generate sales but does it damage our brand? Is there another way?


My philosophy is to not discount. Reducing prices or snap sales devalues the brand and creates an expectation for the client that they can come back next time and get the same deal, creating a never ending cycle of discounting. Rather than discounting, look to add value with your product or service. 

Why would you ask for a cheaper price if you thought you were getting the best value for money out there? If a client is asking for a discount, then in their minds they are looking to balance the equation when they perceive an item is not worth the investment. I genuinely believe that most clients are fair and reasonable, and that they really want to buy from you. Instead of discounting, look for ways to increase the value of your product or service instead.

Here are two ways to avoid the discount trap in your small business:

1. Clearly spell out the benefit of your product or service

Let’s assume you already have great rapport with your clients, they know, like and respect your business. Communicate your offering in a way that is a benefit to  your clients. As business owners, we often think everyone is interested in our product features, however the truth is that clients really couldn’t care less. Clients want to know what your product or service does for them – It’s called WIFM (What’s in it for ME).

There’s a game you can play with your team that explains how to sell the benefit of your product or service instead of the features. The aim is to pick a random object and see if you can describe as many features and benefits as you can. The best part, only for the purpose of this exercise, is it doesn’t need to be true. In fact, the crazier the better.

Let’s use a coffee cup as an example. Feature: The handle of the cup has been ergonomically designed Benefit: You can hold the cup while the tea cools without creating fatigue in the palm of their hand. Feature: The opening of the cup is 4 finger widths wide Benefit:  The opening allows the tea to brew taking on the characteristics, enhances the flavour Feature: The height of the cup was tested over 100 years to arrive at the present height of 10cm. Benefit:  This is the optimum height to keep the tea hot so you never have to drink cold tea

So there’s a brief game to assist in communicating benefits to your clients rather than features, the next step is to look to value add.

2. look for ways you can add perceived value to your product or service

When looking to value add, think about what the client is needing at the same time or immediately after your services. Look to partner with a business and obtain a low to nil cost and offer it to the client when their price objection comes up. Here the aim is to look for something that has a low intrinsic cost to the business but a high perceived value to the client.

For example: “I’m sorry, I really can’t go any lower on the price of this wedding ring, but what I can do is include a gift card to a fantastic photographer to capture your engagement photos so that you can share this special moment with your family.”

Don’t get caught in the downward spiral trap of discounting your prices. It will become a vicious cycle, where no one wins. When you help the client understand the value that you are bringing to the table, they will be less price focused. Throwing in more value by partnering with other like-minded business might just be the extra oomph you need to get the deal across the line and protect your margins.



About the contributor:

As an international award-winning author and national award winning jewellery designer, Karl has an uncanny eye for quality and uniqueness. His craft lies not just in making unique jewellery but also in connecting with the people, taking them on a journey to find or create a special piece that tells a story. Website:    



Post your comment


No one has commented on this page yet.

RSS feed for comments on this page | RSS feed for all comments