How Discounts Can Make Your Business More Efficient

Letting customers participate in your productivity improvements can motivate them to make behavioral changes that reduce your costs.

Offering customers discounts on their purchases to boost sales and profitability often has the opposite result.

You can increase your revenue in the short term, but as your customers get used to your discounts, they will base their purchases on the timing of your rebates, which could permanently crush your margins. You may end up making even less profit than before you started discounting.


When Discounting Your Products Could Cost You Money: Many businesses discount their products and services to boost sales. But do they also make more profit?


Discounts Can Help You Become More Efficient

But there may be a few limited circumstances where discounting can make financial sense.

Imagine your customers were to commit to your services for 12 months instead of monthly. Or they booked their appointments on a specific day instead of choosing them freely.

Could you save time and money by better spreading your workload or reducing travel time between stops?

If your answer is yes, incentivizing customers with a discount for changing their behavior can make financial sense.

For example, a mobile dog groomer could offer a discount to customers who book their appointments on a specific day when the groomer is in the area and for multiple grooms in advance. The mobile groomer would benefit in two ways:

  • Reduce travel time between stops, which could increase the number of dogs they could groom that day;

  • Improve visibility into the workload ahead, which would help balance their staffing level.

Software companies are another good example. They often offer significant discounts for one or two-year commitments, even without you having to pay the entire amount upfront. If you like a particular software and have made it a part of your workflow, I recommend taking advantage of these incentives.


9 Cost-Saving Tips for Leaner Times: "A penny saved is a penny earned." — These 9 cost-saving tips can improve your cost structure.


Share Your Savings, But Don't Give Them Away

Letting customers participate in your productivity improvements can motivate them to make adjustments on their end.

However, sharing your savings doesn't mean you should give the entire amount away.

I recommend setting the discount so that you can keep 50% to 75% of the financial gain.

You can also pair the rebate with rewards that don't cost you anything, such as giving access to exclusive content, invitation-only social media groups, or priority booking.


Reward Loyal Customers Without Spending Anything: Discounts are the most expensive way to thank your loyal customers. Instead, consider rewards that are very effective but do not cost you anything. Here are 10 ideas.