The people that know me and have worked with me in any capacity of the past forty plus years know that I HATE DISCOUNTS.
I know you have to offer some special pricing every now and again. However, too many people just change the price on an item in a transaction and that leaves a bad impression in the mind of the customer. Oh I get it. The customer feels good about getting a reduced price. Until, that is, they think about it. Sooner or later they begin to understand that if you changed the price on that item one time, without requiring anything more from the customer – well your price must have been too high.
If you have to change a price you must change something else in the transaction in order to justify the reduction in the price. Increase the quantity. Place it on a stock order and have the customer wait for it – anything that makes sense.
Why do I HATE DISCOUNTS??
Well look at this example from a typical service department…
Sell Price 100 Discounted 90
Cost Price 35 35
Gross Profit 65 55
Expenses 40 40
Net Income 25 15
A 10% discount on the selling price becomes a 15% reduction in the gross profit and a 40% reduction in the operating profit. I HATE DISCOUNTS.
I know you have to make adjustments from time to time. It is important that everyone understand the implication of a small discount in selling price. It becomes huge at the operating net income line. The time is now.