Having a Sale is NOT the Answer

In the decade+ that I've been obsessed with businesses, I've seen a lot. One thing that I've witnessed, and shamefully even participated in, is the disease that is "having a sale."

I know, I know. It's such a great idea! Let's have a sale every Friday. It's July, let's have a summer sale. I just got my nails done, let's do a discount!

It's infectious, nasty, and downright not the answer.

What's wrong with having a sale?

When done innocently, sparingly, and with good intentions, nothing is wrong with having a sale. However, this is rarely the drive behind having a sale

Having lots of sales devalues your products/services, and your business.

'Tis the truth. When I see a small creative business constantly offering discounts and free products, my first thought is that they're really hurting for sales. You don't want to convey this message to your potential customers! You want them to think you're not hurting. That you're worth what you're asking.

Pity sells aren't as numerous as actual sells. And you aren't as proud of them either.

People will never buy your products at full price

I have a sneaking feeling you have a business that just popped into your mind. For me, I think of Hobby Lobby. Those weekly sale sheets used to be weekly holy grails to me. I would wake up every Sunday, check the website, and plan my Hobby Lobby trip for the week. I even learned their pattern. It was sad.

But, I never bought anything at full price. I knew that if I just held off another week or two, then the jewelry pliers would go on sale and I could buy them at 40% off.

Sure! This doesn't put Hobby Lobby out of business, but what does this do to an indie business who has trained their customers in the same way? Not pretty things, my friend.

(Also, I've quit my Hobby Lobby addiction and been clean for years. Thank you for your concern.)

This is also true when you lower your prices just to draw in new customers. Their first impression is that your product will only be worth the discount that they're paying, and many will expect and ask for a discount on a later purchase. And we all know how much we seriously hate that.

It's all in THE NUMBERS

All too often I hear of some creative business owner having a sale to increase their profits for the month. Not a good way to go. Let me break it down for you. I'm going to create a fictitious business and show you what happens:

Emmarie Flemmarie LLC has a gross revenue of $1000 per month selling her awesome flawesomes. Flawesomes are $25 to make, and Emmarie sells them for $50. Each month she sells 20 flawesomes.

For illustration's sake, we'll pretend she has no overhead expenses and gets to keep the $25 profit for each, making her monthly profit $500, which she spends on paper, so there's none in savings (why do I fear some of you can relate? :-D).

On June 1st she gets an evil IRS bill for $1000, which is due on July 1st.

She decides to have a sale of 25% off to really get the product pushed, lure in new customers, and super glues her fingers crossed to make sure good luck is on her side.

By dropping the flawesome's price from $50 to $37.50, she has reduced her profit by 50%. She will now only get to keep $12.50 from each flawesome sold.

She will have to sell 80 flawesomes to pay her $1000 IRS bill. That's 60 more than usual.

By offering her goods at a sale price of 25% off, to double her usual profits she has to sell FOUR TIMES AS MANY as usual. In one month.

Good luck.

ALTERNATIVELY

Instead of having a sale, Emmarie decides to raise her prices by $5. Five bucks is menial enough that it probably won't deter any customers, but can really provide a boost.

Now, Emmarie's profit on each flawesome is $30. A total of 34 flawesomes must be sold to reach her goal of $1000 profit. That's only 14 more than her usual 20, and is way more doable than 60 more.

Emmarie spends a bit of extra time sending out newsletters, pitching her products to bloggers, and - bazanga! - Emmarie pays the IRS.

Take that, Man.

This same thing can be used in any situation where you may need to boost your profits, whether it be to pay extra expenses, or maybe even just make your paycheck a little more hefty. Raising your prices a couple of little dollars will be much more effective than having any type of sale.

WHEN IS A SALE A GOOD IDEA?

When you are rewarding your loyal customers. Period.

Offering a discount for return customers or newsletter subscribers, or - my favorite - holding an annual (or semi-annual) sale with the goal of rewarding customers, is the only times you should ever discount your items.

Think of Victoria's Secret. Those panty-lovers are notorious for not ever having discounts on their bras. Except, that is, for their semi-annual sales.

They're far enough apart that if I have a serious brassiere malfunction, I will definitely go pay full price for one of their boob-holders, which is the only brand I have worn since I worked there in early college. However, they're close enough together that, if I can stand it, I will wait until January or June to go stock up on a sixth month's supply of undies.

Why? Because, in a sneaky marketing way, they are thanking me for being a loyal customer, and I can respect that.

Ok, I can just hear you now: "But lots of people shop at Victoria's Secret during the sales who aren't loyal customers!" Well, that's just a great side-effect of having a sale, huh?

On a more personal side (ha! what's more personal that my choice of undergarments!), I did this same thing for my first business, a tanning salon I owned and ran right after I quit that job a Victoria's Secret.

Right after I took over, and again on the anniversary, I had a Customer Appreciation Weekend. It was a tanning party, of sorts. I sent out mail to all the current and old clients, I put fliers up around the college, and I had a weekend of discounts, free stuff, and potential skin cancer. And I. Made. Bank.

What this did was let my customers know that I was thinking about them and wanted to reward them for being there. I also wanted to let old customers know that new things were going on in the salon. And, yes, it was a chance for me to lure in new customers. But, it was well thought out, available for only a short time, and - my friends - it built loyalty. Which will be more fruitful than a weekly BOGO sale.

As long as a sale's sole purpose is not for you to make money or move product, then I can respect that. It should be about thanking your customers.

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