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Discounts Can Kill Your Start-up

    • 1 posts
    May 8, 2013 1:48 AM EDT

    As a first time entrepreneur, you sure have your own insecurities and doubts on success or failure of your business. These insecurities often lead to making marketing blunders that can cost dearly to your business, often leading to heavy losses and early closure. Obviously you do not want to start on a wrong foot, do you?

    Offering discounts is one of such marketing mistakes that start-ups end up doing. Wondering why? Here are some experiences I had while starting up and lessons that I learned.

    Customers come for your product not discount:

    If you have made an awesome product or service, customers are looking at your product, not its price. Price does has a significant role in consumers’ purchasing decision making process, however, pricing research is something you should do before announcing the product in market.

    Once out there, you have stick to decisions of pricing to see who are the customers ending up really buying your product. They are your ideal customers.

    You will be answering many window shoppers who would like to pass their time with negotiations and bargaining on pricing and discount. If you have been waiting for your FIRST CUSTOMER for a long time, chances are you will break down at some point and give out the product at much less than what you quoted. This is one decision that will trouble you for a long time in your business. It did to me.

    I offered straight 50% discount to my first customer thinking at least I will have made my first sale. But followed was a bunch of follow up customers who were ready to buy out at the offered price for their pure love towards the product. That’s what I call Ideal Customers. So better wait until its dawn than giving up so easily.


    Irrespective of discount, customer will spend all their budget:

    Surprising isn’t it? Have you ever noticed when you go for shopping, you have a budget in your mind?

    For example: I am going to spend Rs 5000/- on XYZ items. Now, when you find discounted items @20%, have you ever come back with the balance Rs 1000/- ? It is a rare phenomenon. If you are getting 20% discount, most probably you will be buying more stuff with remaining 1000 rupees and feel so excited that you got more out of your budget.

    So do your customers. If a product is too good to resist, people spend their planned budget completely. Therefore, feel free to quote a price that is justified to your product. However, if you want to delight your customer, add more value to your product through bundling. Bundle some services or complimentary products that can delight your customer. For example: Buy sunglasses and get a lens cleaner free.

    Remember: There is a difference in discounts and best price offer

    Your customer will spend their complete budget anyway; your skill is to make sure they spend their entire budget on you. How do you do that? ;)

    A strategy that Coca-Cola used when it slid behind Pepsi: Consumers spent their money on drinking water, Coke’s team made sure that whatever their consumers spend on drinking water, they spent on buying a Coke. Hope that sounds cool!


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