For many Covid-19 has temporarily changed the way business is done and for others those changes will be permanent. This is both good and bad. The good is that for those that adapt, they will find news ways to do business. The bad is that for those who remain steadfast in their ways, they may not survive. This brings me to today’s topic, discounts.
Discounts are necessary
Before going any further, many of the enterprises deemed as essential along with those businesses that have only had to relocate their workers to their home, are most likely able to continue with business as usual and don’t need to offer any discounts. For the rest though, discounts may be necessary.
There’s lots of commentary on social media platforms about the merits of maintaining your pricing during these disruptive period. These statements are usually is prefaced by slogans such as “Get paid what your worth” or “Don’t discount your value” and so on. These are all great motherhood statements that have some value when things are normal. But these aren’t normal times.
Let’s be honest, even in the best of times, you only get to take that position when you’ve been in business long enough and have created a reputation as an organization that consistently deliver results and are deemed to be an expert in your field. So, regardless of what you think you’re worth. It only matters what your customers think you’re worth and chances are your customers are being enticed by intriguing value propositions by your competitors.
30-50% of SME’s will fail
Having been through more than one economic upheaval and survived to talk about it, I disagree with whole notion of not offering discounts. Based on estimates, approximately 30-50% of SME will not make it and as an owner you have but one goal for the next while-survival, period. Since the majority of your customers are probably suffering, they will be looking discounts on any spending they’re making and if you don’t, your competitor will.
Assuming 30% failure rate, the 1st 10% are already gone, with the 2nd 10% only weeks away. It’s the last 10% who you need to worry about, because they’ll be gunning for you by targeting your customers by offering discounts. Why? Because they’re desperate. This in turn will put huge competitive pressure on your business as you compete with lower priced competitors. For those that are financially secure or are unaffected by the impact of Covid-19, hallelujah! Otherwise, you need to make sure you keep cash coming in, because if you’re not selling anything, you risk falling into the 30%.
Protect your brand
The challenge in all of this is fighting our own pride and ego. They say that “pride goeth before the fall”. This translate into those that are too arrogant will fail. If there ever was a time to seriously consider offering temporary discounts, this is it. It’ll give you the ammunition to protect your brand and your company. Remember that breaking even is ok, because in times like these, profit can wait for better days.
So, how do you go about offering discounts that don’t become permanent? One simple way is to turn what you’re doing upside down. Why not consider offering a temporary Covid-19 discounts on your product and services? You can communicate to your clients that in these difficult time you want to do your part and help other business owners.
How you do this is quite simple. On your quotes or invoices, you show what your regular fee or product costs as you would normally. Then on the next line you show “Less temporary Covid-19 discounts” and then deduct the amount of the discounts.
By itemizing the discounts as separate line items on the quote or invoice, you reinforce your goodwill gesture, even though it’s self preservation. By having it as a separate line item it reinforces that it’s a specific discount thereby inferring that this won’t be forever. Failing to list the discounts separately, effectively creates a new lower price. When things return to normal and you and your business is still standing when many aren’t, you can then begin to remove your discounts.
To quote Darwin “It’s not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change”
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