Why is it not always profitable to make discounts?

Every time the holidays approach, discounts are announced everywhere and on everything. Sales have become commonplace for both shoppers and store owners. The latter don't even think about whether there is a need for discounts for their business. And it would be worth considering...
If you are selling successfully without discounts, why should you follow an established tradition that is not beneficial to you?

Why do you lower the price?

1. Winning customers away from competitors

A sale begins, and customers are eager to buy goods where the price is lower. If you sell the same product as your competitors, the only way you can differentiate yourself from them is through price. Therefore, your desire to lure customers with a discount is understandable.

Why it is unprofitable to reduce the price

For this technique to be profitable, the discount must be at least 15%, otherwise it is not attractive to the buyer. The higher the discount, the lower the profit. And it's not far from losses... But what about competitors? How do they manage to sell with big discounts? It is possible that they are operating at a loss, and this is their headache. Maybe they have reduced the cost of goods. If they did so at the expense of product quality, they may lose customers for whom quality is more important than price in the long run. If they have managed to optimize their costs, you should also analyze opportunities to reduce the costs of production or purchase of goods, delivery and storage.

2. Make money on the sale

You expect additional profit because discounts will attract more customers and increase turnover.

Why it is unprofitable to reduce the price

To achieve this goal, you need to achieve significant sales growth. For the profit level to remain the same with a 5% price reduction, you need to sell at least 30% more goods. With a price reduction of 10 and 15%, the turnover should be even higher. Are you sure that by giving discounts, you can get much more customers just by lowering prices?

3. Attract new customers

You want to expand your customer base and continue to invite them to your store by sending them newsletters.

Why it is unprofitable to reduce the price

Customers who are attracted only by the discount will not buy the product at full price. You will see them again only during the next sale. The same customers who appreciate your product regardless of the discount will become your regular customers. But such customers can be motivated to buy by informing them about the quality and usefulness of the product. There's no need to make discounts at the expense of profit.
In addition, think about how you will cope with the increased flow of customers. If you don't have a sufficient stock of goods, you won't have time to advise customers, pack and deliver goods on time, and you will lose customers. Even discounts will not help.

4. Sell off inventory

You are hoping to get rid of stale or seasonal goods. That's a reasonable idea. But analyze the impact on your bottom line.

Why it is unprofitable to reduce the price

Simply calculate your profit losses in the case of storing seasonal goods and in the case of selling them at a discount. Let's say a raincoat costs $10, and it costs $1.5 to store it between seasons. Reducing the price of a raincoat by more than 10% is not profitable.

How to sell without discounts

The goal of customers is not a discount, the goal of customers is a useful product. Add value to your product in the following ways.
Improve the quality of service: use beautiful and original packaging, offer several payment and delivery methods.
Offer a product that no one else has. You can produce a unique product or import something from other countries that is not yet available on our market.
Improve your store's website. Make it attractive and convenient for visitors, constantly update the content, and use online consulting.
Show attention to your customers. Send birthday greetings, send out useful information, new product catalogs, make additions to the purchased goods in the form of small gifts. This way, you can make the product more valuable to your customers and your online store more profitable.

Do not overestimate the importance of discounts for successful trading. Better evaluate the advantages of your product and use them to promote it.