Promotions and discounts for shops: how to offer them without a loss

Why a promotion can become a source of loss

A discount is an easy way to raise sales, but more turnover often brings less profit. If you do not calculate in advance what you give up, you may sell more and earn less.

The reason is simple: a discount comes entirely out of your margin; it is not a percentage of the part that stays with you.

Calculate the margin before the discount

Below is an illustrative example; take the real figures from your own business. Say a product costs you 80 and you sell it to a shop for 100. You keep 20 per unit.

If you give a 10% discount, the price becomes 90 and you keep only 10 per unit: the profit is halved.
To keep the same total profit you would have to sell twice as much.
The smaller your margin, the faster a discount eats it.
So first find out how much you keep on each product.

If after the promotion you do not really sell as much more as you counted on, the discount is a loss, even though turnover has grown.

Promotion types that usually work better

Every product sells well without a discount too. Use a promotion where it makes sense.

Slow-moving stock: what sells slowly and ties up cash in the warehouse is often better sold at a discount than left to expire.
A volume discount: a small reward for a bigger order, so the shop takes more at once and delivery gets cheaper for you.
Introducing a new product: a temporary price so the shop tries it, then back to the normal price.
A bundle: two products together at a better price, if one of them sells slowly.

Rules that protect you from a loss

A good promotion has clear limits. Without them a discount becomes the rule and shops will no longer accept the normal price.

A time limit: always limit a promotion in time, so the price returns on its own afterwards.
A quantity limit: say how much it covers, so one shop does not stock up for months.
Who it applies to: all shops or only regulars, and say so clearly in advance.
A minimum: offer the discount only above a certain order size, so the cost of delivery is covered.

How to tell the shops

A promotion the shop does not know about does not work. Announce it in advance, clearly, and in the same words to everyone.

Give the exact product, the new price and the end date.
Explain why there is a promotion: this shows the shop it is a proper offer and not a mistake.
Change the price in one place so the shop sees in the catalog the same thing you tell it.
Remind shops once before it ends, so you are not flooded with questions at the last moment.

In Strelf prices and deals are on one page, so changing a price and setting a time-limited deal happen in one place.

How to judge the result

Once a promotion ends, look at the result once. It is the only way the next one will go better.

Did the quantity sold and the total profit grow, not just turnover?
Which shops took part and which stayed aside?
Did sales return to the normal level after the promotion, or do shops now buy only on promotion?
Which product sold best, so you can use it as the model next time?

Checklist

You know how much you keep on each product before the discount.
You have worked out how much must sell so the promotion does not lose you money.
The promotion has a time limit, a quantity limit and a clear rule on who it applies to.
Shops know the product, the price and the end date in advance.
When it ends you look at the result and decide whether to repeat it.

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