Everyone Loves a Sale: Discount Pricing Strategy
Are you a bargain hunter? Do you live for the thrill of a good deal? Some customers thrive on the nonstop chase for a discount, but if you’ve ever wondered if having the lowest price in town will make you the belle of the budding cannabis ball, then there’s a lot to consider.
Let’s take a look at what makes this pricing strategy appealing as well as the downsides of being a cut-rate cannabis retailer.
Sale Prices Can’t Be Forever
As far as discount pricing is concerned, you can’t realistically offer bargain basement deals on a daily basis. Flash sales are great because they only last a few hours, but how often do you trust those “Everything 30% off” signs?
Even the signs cost money, and it takes time to get them printed, so chances are pretty good that the items in the store that are advertised as 30% off have probably been excessively marked up prior to the supposed sale. To give your customers the best bargain, make sure your sales are authentic and only last for a limited time. Remember, “This Day Only” should not happen every day of the year.
Discounting to Reward Customer Loyalty
This strategy has real benefits … if you remember to use it wisely and sparingly. If you want to reward customers in your cannabis shop for faithfully purchasing time and time again, you can create a discount plan that benefits them directly.
Many online e-tailers send out “family & friends” discounts quarterly or offer “BOGO” benefits once a specified amount of purchases have been made. This, in essence, rewards VIP customers, and they’re likely to make additional purchases during your discount sales. Just be careful to schedule these wisely and infrequently. The more often you lower the price on inventory, the more likely you are to experience customer blowback regarding pricing as a whole.
Quick Sales Turn Inventory
If your shelves are growing dusty with products that haven’t moved, then discount pricing can quickly reduce those stagnant products and make room for fresh offerings. These types of sales work best when they’re impromptu and not tied to any specific buying period, like Black Friday. By offering these periodically, your repeat customers will be on the lookout for discounts but will also continue buying regularly because there’s no guarantee that a sale will happen.
Bargains Can Hurt Your Reputation
You know the bargain stores. The ones that promise every item costs less than a dollar. Sounds good, but how often do you shop there? Would this be your go-to shop when looking for the latest merchandise? Do you think low price retailers have a strong reputation for quality or customer service? Without pointing fingers or naming names, it’s safe to say that most of us would seek a more upscale source when looking for something unique, trendy, and special. With that in mind, keep an eye on your overall approach, and you’ll better capitalize on sales from discerning customers.
Low Cost Is Often Perceived as Low Quality
Bottom line, many customers perceive price as a reflection of quality. Just look at the popularity of big name car brands. Would you rather drive a bare-bones manual compact car or a fully-equipped automatic sedan? The same logic holds true for your store’s reputation. If the products you carry are consistently underpriced, customers may assess (correctly or otherwise) that your products are inferior.
In the short-term, discount pricing has real advantages. You can free up shelf space quickly, move larger quantities of lower priced products, and create an immediate boost in your revenue. But the long-term outlook must be designed to sustain your profit margin and keep customers coming through the doors. As with many other things in life, balance remains king.
Need More Guidance?
If you’re interested in learning about other pricing strategies and how to further set yourself apart from the competition, download “How to Price Your Products: A Guide for Marijuana Retailers.”