From the course: Pricing Strategy: Value-Based Pricing

Unlock the full course today

Join today to access over 22,400 courses taught by industry experts or purchase this course individually.

Discounts are double trouble

Discounts are double trouble

From the course: Pricing Strategy: Value-Based Pricing

Start my 1-month free trial

Discounts are double trouble

- Discounts are a major challenge you need to overcome in value-based pricing. And they come in different forms and shapes. We consider discounts as any reduction of the price you deserve from your customers. Discounts are bad because they cost you twice. They lower your margin, and they reduce the perceived value of your offering. A recent study by Nielsen has shown that in Australia, 51 billion Australian dollars is spent on discounted sales. However 48% of those purchases would have happened anyway. In other words, there are items that would sell whether they were discounted or not. A good example is diapers. If you have a little one at home, and your favorite diaper brand is off by 20%, you'll stock up for weeks until they are on sale again. While the diaper example is well-known, at least to all parents, even professional service firms like lawyers suffer from discounting. When I work as a pricing consultant for a large pan-European network of lawyers, you realize that…

Contents