Business chiefs should focus on the value of their service and products rather than discounting their prices, according to Shweta Jhajharia.
Companies often react to a fall in sales by slashing the price of their proposition, but this is ill-advised – especially for those who provide services, according to the principal coach at The London Coaching Group.
She said: “If you are planning to attempt a discount in your product, make sure you assess the actual impact on your business – often it is not worth it.”
Company heads looking to take their business to the next level should consider increasing, not decreasing their prices, according to Ms Jhajharia, adding that most people only increase their prices because their costs have increased.
“If you have been in business for some years, your brand has gained value. You have proven that there is a market for your product and that in itself makes it more valuable.
“Also, as a long-standing business, you provide assurance to customers that your product is worthy – so you can add a premium for that assurance.”
Firms can also look towards their competitors to figure out how and why they are better, or consider what can be done to trump rivals so that they can increase prices, Ms Jhajharia said.
When the value of your product has increased, you can then reconsider your pricing strategies, she added.
However, increases in prices, even by an incremental amount, can affect profits – which can be as dramatic as the damage that comes from product discounting, Ms Jhajharia said.
She added: “If you feel it is necessary, you can give your customers a lower price, while adding value, and not discounting, for example, by giving offers instead of discounts.”
If business bosses feel that offering a discount is necessary, they should package it in some other way, she said.
“For example, relate the discount to an early-bird payment or shorter credit terms such as: 10 per cent off if you pay up front.
“The most important thing is to be really aware of the actual effects on your business from the offers you are making. Whenever you can, say no to discounting when trying to increase your sales, and instead think of smart pricing strategies to provide value without slashing your profits.”
Steven Rowe, director at Lucent Financial Planning Ltd, based in the West Midlands, said: “If a client is referred to you, it is because someone has acknowledged and appreciated the quality of service you provide. If a person comes to you because of an advert you have put out, then more often than not, it is about the price you can offer them. I think that the quality of service is more important, but you need to get the balance between quality and price.
“I do not think that there is anything wrong with discounting the price of your service if it might get a few extra clients in, but it is not something you can do permanently.”