How much discount is your small business prepared to offer?
So here we go again, despite previous promises, I’m again talking about tough times for small businesses! Wampit knows, that short-term thinking is a daily reality for many small business owners.
New information has confirmed that many small and medium-sized businesses have become reliant on discounts in order to remain competitive and bring new activity into their businesses. Does this sound familiar to you? You may be one of the many small business owners who are offering increasing rates of discount in order to keep up with your competitors?
Online printing company Flyerzone, carried out a recent study of 5,000 orders for flyers made by small and medium-sized businesses. By their nature, many of the flyers were advertising pricing discounts, but the study found that the amount of discount offered had risen by 5% compared to last year’s figures (the 2012 average amount of discount offered was 21%).
The study found that discount rates were highest in Northern England, with an average of 23% being offered in the North East of England and 22.8% in the North West. It could be that this says a lot about the willingness of small businesses to fight for their customers, and whilst this is certainly the case, it could also be saying a lot about the discount culture, which has grown in recent years.
There are a number of online providers of discount vouchers, such as: Groupon, My Voucher Codes and Hot UK Deals (to name just a couple of examples). Thanks to readily available discount vouchers/coupons, customers are looking to make savings before they choose where to spend their money. For some, it has become a daily part of consumer behavior. These websites, and a number of others offer tempting daily deals, which many consumers visit regularly before making their daily shopping and lifestyle choices.
Also, certain industries are affected by discounting and customers expectations of discounts, more than others. For example, retail, hairdressing and restaurants are 3 areas heavily impacted by expectations of discount. Failure to offer tempting and relevant discount offers, when the majority of competitors are doing so, can leave businesses out in the cold.
As a small business owner, this might provide interesting reading for you, especially if you are not currently very active with discounts.
The idea of offering a discount of more than a fifth off your prices, just in order to keep up with the average, could feel very risky for you. But losing your current customer base, to a discounting competitor down the road, would be unthinkable.