When shopping, most customers these days are looking for the best prices or the best deals they can find. Even though they might not be aware, these customers are searching for businesses that are leveraging promotional pricing. As you can imagine, scoring amazing deals as a consumer can save you a ton of money, but as a merchant, how can this benefit you?
While it is important to keep your customers happy, it is also important for your business to make money. Promotional pricing can effectively help you do both — applying discounts to items without hurting your bottom line. Sound too good to be true? It’s not! Let’s take a closer look at promotional pricing, how it is used, and how it can improve your business.
What exactly is promotional pricing?
Promotional pricing is one of the most common pricing strategies available to small businesses. In short, it refers to putting products ‘On Sale’ or offering a discount. Since there are many different types of promotional pricing strategies, it’s important to choose the approach(es) that best fit the needs of your business. A few common scenarios are:
- Time-based Discounts
- Purchase-based Discounts
- Loyalty Discounts
- Customer-based Discounts
Time-based scenarios can help you get a boost if you find that business begins to slow between certain hours or on certain days, and offer special happy hour prices during those times. While discounted prices will lead to lower margins, hopefully you will make up the difference on volume. An example of a purchase-based discount is the popular, ‘Buy one, get one’. Loyalty discounts allow you to reward customer loyalty, offering special discounts for customers who frequent your business. Customer-based discounts are discounts tailored to specific customers, such as students, new customers, or senior citizens.
But how do I use promotional pricing with ShopKeep?
Now that you’ve learned about a few common promotional pricing strategies, let’s talk about some ways to put them into action.
To begin with, decide which discounts would work best for you. Take a look at cost versus price to get a grasp on the margins for items, and decide which items you think you can afford to discount and how much you can discount them. Then, once you’ve decided what you would like to discount and how, you can create the discounts right from your ShopKeep BackOffice, choosing either a percentage or dollar amount format.
The BackOffice is also the place to apply settings detailing how much an item can be discounted. While you want the promotional price to be worthwhile for your customers, you don’t want to apply a discount that is too large and that could ultimately hurt your business. You can also set controls to manage which employees can apply discounts and how much they can deduct from a transaction.
But how will promotional pricing impact my sales?
In order to fully understand the benefit of promotional pricing on sales, you’ll need to analyze your sales data. Try the promotional pricing for a period of time, maybe a week or month, depending on the volume of sales in your business, and then check to see how the new pricing is affecting your sales.
In BackOffice, select the Sales by Discount report. From there, choose the date range that the pricing change was implemented. The upper section of the report displays the top 10 discounts applied and how much they were used, and also the top 10 discounts by the amount discounted. The lower section of the report is the Table View, which can provide you with a deeper look into each discount. You will be able to see the number of times that the discount was applied, including sales amounts, return amounts and margins. Use this data, paired with relevant time period data to fully understand what’s working and what might need to change. If the margin on a particular discount cuts into profits or a particular discount was applied too many times, it might be worth scaling back.
The Sales by Discount report can also give insight into how customers interact with your business. For example, if coupons are printed weekly and they are seldom used, there could be value in shifting the efforts to a more popular source used by your customers, such as email marketing.
Utilizing the discount options in ShopKeep can help you make the most of promotional pricing and teach you valuable information about your business. Ultimately, however, the art of promotional pricing relies heavily on trial and error. So even if you first attempt at discounting items isn’t a success, take the lessons you’ve learned, reevaluate your strategy, and give it another try.