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DISCOUNTING

Beware of the impact of discounting on your long-term strategy

By our News Team | 2022

While cutting prices may give your business a short-term boost, ultimately it is likely to be detrimental to your goals.

Is cutting prices for products or services a good strategy for entrepreneurs and small businesses looking for a quick sales boost? Rather not, says Krista Mashore, a best-selling author of four books, business coach and digital marketer.

Writing in Entrepreneur magazine, Mashore says she’s never found discounting to be a successful long-term strategy, unless it’s done properly. Among the reasons to be wary of a discounting approach:

Discounting

Photo by Karolina Grabowska on Pexels

Lower price is perceived as less value

“Most of us believe that you get what you pay for; whether it’s a product or service, we unconsciously associate higher price with higher quality,” she notes, adding that when she worked as a real estate agent it was common for agents to discount their commissions.

She rarely did. “If a person didn’t want to pay what I was worth, then they didn’t appreciate the benefit I could bring to them as their agent.”

So, ask yourself, “Do I really want to build my business on clients or customers who don’t value what I have to offer — who don’t think I’m worth full price?”

You become a commodity rather than a true value proposition 

A commodity is interchangeable and replaceable, and you don’t want what you offer to be just another something that customers can find anywhere, from anyone, Mashore explains.

“Instead, it needs to have a unique value proposition; when you offer a commodity, the only thing you can do is lower prices to compete in a competitive market, and there will always be another business that will come in with prices lower than yours. 

“Put simply, there is no benefit to being the lowest or second lowest in price, but when you have a unique value proposition, you set yourself apart — offer something that no one else in your industry does, so price is not an issue.”

You’re training people to wait for the discount

Everybody wants a good deal, so they’d almost feel foolish paying full price when they can just wait it out until the next discount comes along. The result for a business is erratic cash flow and workloads that spike then plummet drastically.

You can read the full Entrepreneur article here.

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    Dr Kin Kariisa

    Group CEO - Next Media

    Dr. Kin Kariisa is an extraordinary force at the helm of Next Media Services, a conglomerate encompassing NBS TV, Nile Post, Sanyuka TV, Next Radio, Salam TV, Next Communication, Next Productions, and an array of other influential enterprises. His dynamic role as Chief Executive Officer exemplifies his unwavering commitment to shaping media, business, and community landscapes.
    With an esteemed academic journey, Dr. Kariisa’s accolades include an Honorary PhD in exemplary community service from the United Graduate College inTexas, an MBA from United States International University in Nairobi, Kenya, a Master’s degree in Computer Engineering from Huazong University in China, and a Bachelor’s degree in Statistics from Makerere University.
    Dr. Kariisa pursued PhD research in Computer Security and Identity Management at Security of Systems Group, Radboud University in Nijmegen, Netherlands. As a dynamic educator, he has shared his expertise as a lecturer of e-Government and Information Security at both Makerere University and Radboud University.

    Dr Kin did his PhD research in Computer Security and Identity Management at Security of Systems Group, Radbond University in Nigmegen, Netherlands. He previously served as a lecturer of e-Government and Information Security at Makerere University in Kampala, Uganda and Radbond University in Netherlands.

    Dr Kin did his postgraduate courses in Strategic Business Management, Strategic Leadership Communication and Strategies for Leading Successful Change Initiatives at Harvard University, Boston USA.

    • Other current and previous roles played by Dr Kin Kariisa:
    • Lecturer of e-Government and Information Security to graduate students at Makerere University, Kampala and Radbond University in the Netherlands
    • Director of Eco Bank Uganda Limited, one of the largest banks in Africa
    • Chairman of the National Association of Broadcasters, an umbrella industry association for all Television, Radio and online broadcasters in Uganda.
    • Chairman of Board of Directors of Nile Hotel International, that owns the leading hotel in Uganda, Kampala Serena Hotel.
    • Chairman of Board of Directors of Soliton Telmec Uganda, the leading telecom company in Optic fibre business managing over 80% of optic fibre in Uganda.