Promotions and discounts: how to run them without losing money
A promotion brings customers in, but a badly calculated one sells a lot… and loses money. Here is how to prepare and measure it.
Calculate the margin before cutting the price
A product with a 25% margin sold with a 10% discount keeps only 15% margin; with a 25% discount, it earns nothing. Always calculate the remaining margin before announcing a price.
Choose the right products
- Products with a high margin or to clear (end of line, near expiry).
- Products that draw people in and make them buy other things.
- Avoid discounting your star products, already profitable.
Limit duration and quantity
A promotion lasts a few days, or until the planned stock runs out. Beyond that, customers get used to the low price and refuse to go back to the normal one.
Control sellers’ discounts
Only authorised people should be able to give a discount. Decide the maximum percentage in advance and record each discount: it shows in the day’s total discounts.
Measure the result with Kaislo
Compare, before and during the promotion, the number of sales, revenue and margin. Kaislo shows the discounts given and the margin over the period: you see whether the promotion really made money.
Sales, stock, customer credit and evening accounts in one place, on phone or computer. 30-day free trial.
Promotions and discounts: how to run them without losing money
What maximum discount should you give?
One that still leaves enough margin: calculate it product by product before announcing.
How do you know if a promotion was profitable?
Compare sales, revenue and margin before and during the promotion.