CALL US
+61 2 8607 7001
E-MAIL
team@valueculture.com
LOCATION
Level 8, 65 York Street Sydney 2000

Blog Post


Fair Price Promotion and Discount Ideas in Small Businesses šŸ„


 

Promotional pricing can seem like a no-brainer for small businesses. Offer a discount, attract more customers, and boost sales, right? It sounds simple enough. But for many small business owners, this strategy comes with hidden traps that can harm both their reputation and bottom line. They need a price promotionĀ approach that is fair.

 


>Download Now: Free PDF How To Drive Pricing Strategy To Accelerate Sales & EBIT Growth


 

Let me tell you a story.

 

Sarah, a local bakery owner, decides to run a ā€œbuy one, get one freeā€ deal on her famous sourdough loaves. She figures it will attract foot traffic and increase her customer base. For a while, it works. People flood in, eager to grab a bargain. But when the promotion ends, sales plummet. Her regulars seem to have disappeared, and now sheā€™s stuck with unsold stock. To make matters worse, her profit margins have taken a hit. What went wrong?

 

Sarahā€™s experience reflects a common mistake in promotional pricing: assuming that offering discounts will always lead to long-term sales growth. But as many small businesses have discovered, discounts often attract price-sensitive customers who may not return once the deal ends. And worse, regular customers might feel undervalued if theyā€™ve been paying full price while others get a better deal.

 

A Larger Perspective on Fair Price Promotion

 

In Australia, major supermarkets like Woolworths and Coles have faced backlash for their misleading discount campaigns. The Australian Competition and Consumer Commission (ACCC) accused them of inflating prices before offering promotions.Ā 

 

For instance, Woolworths raised the price of Oreo cookies from $3.50 to $5.00, only to later offer a ā€œdiscountā€ price of $4.50. In reality, this wasnā€™t a deal at allā€”customers were paying 29% more than the original price! Similar tactics were used by Coles with products like Strepsils lozenges, creating the illusion of savings while actually increasing costs for consumers.

 

Small business owners may not intentionally mislead customers, but they can easily fall into similar traps. Offering a discount to drive short-term sales can lead to long-term issues, especially if customers feel manipulated or devalued. Promotions should be used strategically, not as a quick fix to boost sales. Consumers today are more informed than ever and can quickly spot when a deal is too good to be true.

 

Why Businesses Struggle to Have a Fair Price Promotion?

 

One major reason is the pressure to compete. Small businesses often feel they need to match the pricing strategies of larger competitors. However, big corporations like Woolworths and Coles have more resources to absorb the hit from discounting. Small businesses, on the other hand, often operate on thin margins and limited resources. Slashing prices, even temporarily, can hurt more than help.

 

Another common issue is the assumption that promotions will create loyalty. But as Sarah discovered, the reality is that customers lured in by discounts may not stick around once prices return to normal. Instead of building loyalty, constant discounting can train your customers to only shop when thereā€™s a sale.

 

A Better Approach for a Fair Price Promotion

 

So, how can small businesses avoid these pitfalls while still offering value to their customers? Instead of relying on deep discounts, consider offering value in other ways.

 

Know Your Margins: Before offering any promotion, ensure you fully understand the impact on your profit margins. Deep discounts may boost short-term sales but could leave you struggling financially.

Offer Value Beyond Price: Customers donā€™t always want the cheapest optionā€”they want value. Consider ways to enhance the customer experience through quality, convenience, or exceptional service.

Use Promotions Sparingly: Reserve promotions for special occasions or to clear out seasonal stock. Avoid the temptation to run continuous discounts.

Be Transparent: If you do raise prices, explain why. Transparency builds trust, and trust keeps customers coming back.

 


>>> Setup A Meeting With An Expert <<<


 

Rethink Your Pricing to Promote Your Small Business

 

Promotional pricing can be a powerful tool, but itā€™s not a one-size-fits-all solution. By thinking strategically and focusing on long-term value rather than short-term gains, small businesses can avoid the common pitfalls that often accompany discount strategies.Ā 

 

If youā€™re rethinking your promotional pricing approach, now is the perfect time to act. Your business deserves a pricing plan that works for you and your customers. If you want to dive deeper into this topic or need tailored guidance, reach out. Letā€™s work together to create pricing that truly benefits your business.

 


For a comprehensive view of ensuring the continuous growth of your business, Download a complimentary brochure on How To Drive Pricing Strategy To Accelerate Sales & EBIT Growth.

 

Are you a small or medium-sized business in need of help aligning your pricing strategy, people and operations to deliver an immediate impact on profit?

If so, please call (+61) 2 8607 7001.

You can also email us at team@valueculture.com if you have any further questions.

 

 

 

Leave a Reply

Required fields are marked