Everyone makes discounts today. Customers have long been accustomed to discounts. They want and crave discounts. A discount on a purchase is already becoming a prerequisite and decisive factor in the choice of goods for most people. Buyers do not think about the principles and possibilities of a discount on a particular product. For them the fact of the discount itself is important.
And if with the desire of the buyer to get a discount all is clear. But for you, as a seller, a discount can be a way to ruin or one of the most effective ways to stimulate sales. Therefore, when organizing discounts on their products, it is important to be able to draw a clear line between discounts for the sake of discounts and a skillful marketing tool to increase sales. One-day discounts, discounts on the past collection, discounts on holidays, discounts to regular customers – this is only part of a well-thought-out discount program for your online store.
Don’t create discounts for the sake of discounts
In order not to go out of the pipe, when introducing all sorts of discounts, you should always know what percentage of the price of the goods can be dropped? It is necessary to monitor the level of sales before and after the introduction of the discount, and trade promotion optimization with machine learning provides such an opportunity.
As stated above, the discount program for the online store can consist of different discount options. But all the discounts come down to one basic principle of formation on the basis of the cost. Consider the principle of creating a short-term discount for goods for retail sales. First, let’s determine the cost of your product.
Firstly, determine the cost of your product
This is nothing new to the savvy entrepreneur. You just need to consider everything: the wholesale price of buying goods + shipping costs to the store (if it’s not dropshipping) + estimated shipping cost to the customer (if it’s your own costs) + other expenses (eg storage costs) = cost of goods
The wholesale purchase price is the amount for which you purchased the item for sale. The cost of shipping to the store is the cost of transporting a unit of product from the wholesale supplier/manufacturer directly to the store/store warehouse. It turns out that if you buy 100 units of product (e.g. batteries) for $ 2 and pay another $ 10 for delivery of these products to your warehouse, the actual cost of each unit of product will be $ 2.1 – the price plus shipping.
Add to the cost of goods, if any, additional storage costs. If you pay for shipping the goods to the buyer, then add more of its cost. For example $1. Now a unit of product costs $ 3.1. This will be the cost of goods.
The price of discounted items should not be less than the cost of production
Evaluating the Results of Discounted Sales
The constant monitoring of the sale of discounted products will allow you to react in time and influence the course of sales and, therefore, the profit of the online store. For example, the purpose of the offered discount is to increase your profit in the next month. But already on the 8th, you have fulfilled the plan for last month’s sales and the planned increase in profits. In that case, it’s better to slightly decrease the discount, and next time, perhaps, even try to promote the sale of this product without it at all.
Conversely, if on the 8th there’s no indication that the discount is contributing to new orders, it’s worth recalling it again with a newsletter or considering ending the promotion.
It’s not a good idea to set discounts blindly. Thoughtlessly assigning discounts can bankrupt your online store. Planning, and at least minimal calculation, can fundamentally change your sales results. A discount is a great way to increase sales, retain and attract new customers.