By Precious O’Dahunsi.
So, let me guess, you went for a masterclass, attended a business Bootcamp, heard about Bumpa Black Friday and you have decided that the next thing you want to do to increase sales is to start offering mouth-watering discounts!
Yaay. Let’s clap for you.👏 Amazing. But sorry dear, that’s not the end. 😬
All your sales problems won’t automatically disappear.
Why? Because there’s an art to discounting. In fact, you can do discounting wrong and affect your sales negatively.
So, this article is going to help you. I’ll explain what discounts really mean, how discounts work, and share tips on how to use discounts to achieve the results you desire.
What Is A Discount?
A discount simply means a reduction in the selling price of a product or service. Finish. Whether you're reducing the price of the product because the customer is your pastor, crush, childhood friend, or because you received the instruction in the dream, it’s simply what it is: a discount.
How Do Discounts Work?
Discounts are often calculated in 2 ways: by percentage or by amount(fixed price).
For example, if you use the Bumpa app to manage your business, you can use either of these methods to automatically set up a discount.
By amount/fixed price simply means you reduce the selling price by any amount you choose. For example, if a product is sold for 5000, you can give a N500 discount and that means you will be selling that product for 4500.
By percentage means that you're calculating your discounts by percentages.
So, for example, if a product is on sale for N10,000 and you’re giving out a discount of 10%, that means that you're deducting 1000 naira from the cost price and therefore the discounted selling price is 9000.
You’ve probably noticed that most online sellers use percentages more than fixed prices to run discounts and there are different reasons for this.
The commonest reason is simply because it is easier. Especially if you have a lot of products.
So, let’s take www.lashngproducts.com, who is a vendor on Bumpa, as an example.
She has over 176 products on her website. It’s easier for her to run a sales campaign telling her customers that she’s giving a discount of 10% on every purchase over 10,000, than for her to fix different price discounts on each product. That can be stressful.
I need to mention however that, if you want to run fixed price discounts, it is very easy on the Bumpa app. You can automatically fix the discounted price from the moment you upload the product on your website.
Before you run discounted sales, these are the things you should do:
Many online sellers don't realize that discounts come from somewhere. When you reduce the price of a product, you’re reducing the profit you should be making on it.
In fact, if you don’t plan your discount well, you might actually be making a loss.
So, for example, let's say you brought a shoe from the manufacturer for 4000. Transportation + your packaging cost + expenses bring the total cost of the shoe to 5000.
Now, you decided to make a profit of 2000 per shoe. So, your final selling price of the shoe is 7000.
If you do a 50% discount which means the selling price is 3500, you are actually making a loss.
If you do a 15% discount which means the selling price is 5950, then you are making a profit of 950.
So, you have to determine the discount that you are comfortable with.
You can have different goals for your discount campaign.
For example, your goal might be to grow your social media followers, to make more sales, to get new customers, etc. This will determine the structure of your discounted sales.
If the goal of your discount campaign is to get more sales, you might do a Bumpa Black Friday campaign. Here, you can tell your customer that if they buy items worth 2000 and above, they get a discount.
If your goal is to get new customers, you can use the Bumpa messaging feature to tell your customers that if they refer up to 3 customers, they will get a 20% discount on their next order.
If your goal is to get followers on social media, you can create a competition for your customers to get a particular good at a heavily discounted price, they should get three new people to follow your page and make a comment on a post.
This might sound funny but it's true. Imagine you’ve seen a vendor selling a product for N10,000. This vendor is now running discounted sales and selling them for N1500.
This can do either of two things:
There are different strategies you can use to run your discounted sales and I'll share them with you here.
This is simple. Let the discount be worth it.
If you're selling a product worth 5000 originally, for 4950 during discounted sales, that will not encourage your customers to buy from you.
Depending on your product and profit margin, it is best to offer good discounts ranging from around 10% to 40%.
So, if you’re selling hair products, for example, you can pair a wig and hair oil together, add their prices and slash it with a discount. This can encourage more customers to buy.
This is probably one of the commonest strategies. You can set a discount for customers that buy up to 3 0r more of the same product. That way it's cheaper to buy in bulk than to buy single products from you and that gives you more sales.
To wrap it all up, when discounting is done right, you can increase sales by 50%, 100%, or even 200%. You can also use this knowledge about discounting beyond running a Black Friday campaign. You can use it to run Christmas sales, Valentine Sales, Anniversary sales and so much more.
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