PROFIT ARCHITECTURE — by Ray Costello
Stop Discounting: How to Win the Price War (Without Lowering Your Price)
If you have a 30% margin and you discount your price by 10%, you now have to sell 50% more units just to make the same money you made yesterday.
Every time you discount, you are not 'winning' the customer. You are training them to wait for the discount. You are destroying your margin.
The Mathematics of Discounting
If you have a 30% margin and discount 10%, you must sell 50% more units just to make the same profit. You are working harder for less money.
The Alternative
Instead of dropping price, raise the perceived value. Add a bonus. Offer a guarantee. Bundle a service. Give them a reason to buy at full price.
Return to Incrementum