Offering promotions, offers or discounts can be a great way to launch and sell your products. However, they need to be well thought through to ensure they’re profitable (or, if you are prepared to lose a little money, that you’ve at least decided and planned for that). This is a beginner’s guide to when and how to use them.
What do I mean by discounts and promotions?
Hopefully a discount is self explanatory. By that I mean anytime you offer something off your product price – whether it’s a monetary amount or a percentage.
A promotion, or offer (to me, it means the same) is anything you do (and I’ll give some ideas later in this post) with the aim of attracting more customers and selling more of your products.
Why would you want to offer discounts or run promotions?
They’re basically a marketing tool. Something you can use to:
- Talk about – on social media, in your emails, on marketing materials, etc.
- Get customer details, so you can market to them at a later date. (i.e. by encouraging someone to sign up for your email list by offering a discount if they do.)
- Encourage a repeat purchase. (i.e. by offering something special for returning customers.)
- Help to launch a new product and get your first sales.
- Sell more!
How do I decide what (and how much) to offer?
First you need to look at your margins and work out what you can afford.
If you’re making £5 profit on a product, for example, you need to decide how much of that profit you can afford to give away and work it out from there.
Alternatively, you might decide (if you were looking to promote a new product, for example) to set a budget for promotions. From here you could work out how many products you could afford to discount and at what amount.
As an example, you might decide to spend £100 on promotions.
Let’s say you have a product that costs £12.50 to produce (including production, shipping, packaging, etc). You plan to sell it for £25 to make (a pretty healthy) £12.50 per product.
You can then work out the best discount you can offer for that £100 you’ve budgeted.
For instance, if you offered a 50% discount you could afford to sell 8 at £12.50 each.
If you went for a 20% discount (on £25) you’d be taking £5 out of your profit and could therefore afford to sell 20 at this price.
It’s really a case of playing around with the numbers and seeing what works.
Should I give a discount in £ or %?
You want to choose whichever sounds highest. A great rule of thumb I’ve heard is that for anything over £100 a percentage discount will be more effective. For anything under, use a monetary discount.
For example, the prediction is that a £25 product with a £5 discount will do better than if you say it’s a 20% discount.
The only way to be sure here, is to try both and see what converts best!
Do I need to set up a code?
This depends on a few things:
- Where you’re offering a discount (which marketplace).
- If you want it to be open to everyone, or a select few.
- If you want to limit the number of discounted products you see.
If you want people to meet a set criteria (be returning customers, for example), or you want to limit the number of products you sell at a discount, then asking for a code is a good idea.
Many online marketplaces offer this and it’s easy to set up.
If however you’re running this as a sale, or a time-limited offer, you may want to leave it open to everyone. (Just be sure you can afford this!)
Is there anything else to be aware of?
Yes, I’d suggest putting a limit on the number of products a single customer can buy at a reduced price – especially if you’re offering a great deal.
The last thing you want is to have competition the following week, from someone who’s brought your product at a discount and is now attempting to re-sell it at full price!
When should I offer discounts or promotions?
My advice is to have a strategy for this and not to do it too often – or else people will just wait until your next sale or promotion comes around til they buy from you.
Instead, I’d set out a promotional plan in advance (knowing that things can do and change).
Instead of offering discounts at the ‘traditional’ times (such as Black Friday, January sales), why not go against what everyone else is doing and run your promotions when nobody else is? That’ll help you to stand out.
If your product is seasonal, then take that into account too and think about when people will naturally be looking to buy it.
I can’t afford huge discounts, what else can I do?
Here’s just a few ideas of ways you can offer great value, while still retaining your margins.
- Run a competition / giveaway. Why not enter all customers over a set period into a draw with the chance to win a great prize from you?
- Do something for others. i.e. for every product bought you’ll donate a product to a related charity or organisation. Or perhaps you’ll donate a % of profits.
- Offer a smaller discount. Don’t feel you need to offer big price reductions if you can’t afford to (or don’t want to).
- Offer a discount on a bundle, or multiple products. I.e. to get the discount, customers need to buy more than one (or perhaps more than one thing.)
- Give something extra. Maybe a small sample of another product (I’ll soon be offering a @raiseupmums cards taster pack with all orders), or a code for a discount off any subsequent purchases. Even a little handwritten note or card is appreciated.
- Limit the number of discounts you offer. Perhaps the offer will only be for the first 10 customers, for example.
- Collaborate with another business. Perhaps either offer a bundle of products (one of yours and one of theirs) at a discount, or agree that anyone who buys from one of you receives a discount from the other. Another advantage here is there’ll be another person helping to market the offer.
- Run buy-one (or more!)-and-get-one-free offers.
- Offer free delivery.
Remember you can get as creative as you like here – just make sure the money works and you won’t be losing money (or at least not more than you’re prepared to).