The main goal for running a Black Friday or other large seasonal sale on your ecommerce store is to make a profit. But how do you run a sale without losing money?
Investor and billionaire Warren Buffett shared these famous rules for making money:
This is some sound advice and in this article, we share how to run a sale without losing money.
Tips to Run a Sale Without Losing Money
Make sure you will make a profit with every sale. If a 50% discount means you’re going to lose money on the sale, you need to offer a less generous discount. Then raise your prices during the off-season so you can run a 50% sale next year. We recommend a 30-50% discount to compete for the attention of the BFCM shopper.
Keep it simple. Especially if this is your first big sitewide sale, avoid spending money on expensive design services, marketing, or ads. Using a tool like the Sitewide Sales plugin for WordPress will help you to create a simple banner and landing page that fits in with your site’s current design.
Make sure your discount sales are working. When you discount your product 50%, you need to sell 2x as much to break even, and 3x as much to make a good profit. A good system like the Sitewide Sales plugin will track your conversions and revenue to make sure that your sales are actually making you more money.
Don’t run too many sales. You need more customers during a sale to make up for the discount. Where are these customers coming from? Sometimes, they will be opportunistic Black Friday/Cyber Monday (BFCM) shoppers who saw your site on a list or somewhere you’ve been marketing to. More often, these extra customers were already on your mailing list, considering your product, or generally in your orbit. When you run a sale, you pull from this backlog of near-miss customers. It can take time to build that backlog back up.
Running a Sale at a Loss
There are a few times you might run a sale at a loss.
First, you might be willing to invest (by selling at a loss) in order to grow your market share or customer base now. This should only be done after careful consideration.
Second, if you have excess inventory, you might sell something at a loss to get it out of your warehouse or storage. Get rid of that old inventory and make room for newer, more valuable, and in-demand products.
Third, you can raise an influx of cash (if you’re desperately in need of money) by maximizing sales of products whose value can be delivered over time. This is a risky move and works best when you limit that risk by only selling a limited number of products or subscriptions at the too low price point.
Generally, it is good business 101 practice to make a profit with each product sold, even when running a sale. The tips above should help.
In some cases, the more you sell, the more money you lose. It is true because sales and profit are not the same things – sales do not always equal profit.
In some cases, the more you sell, the more money you lose. It is true because sales and profit are not the same things – sales do not always equal profit.
Make sure you will make a profit with every sale. If a 50% discount means you're going to lose money on the sale, you need to offer a less generous discount. ...
According to surveys approximately 30 to 40% of businesses listed for sale actually ever sell. Most experienced business brokers and expert dealers will tell you this is probably accurate. Here are some questions that come to mind that bear thought-provoking responses: Why do so many businesses fail to sell?
One of the reasons for losing a deal is the lack of analysis or understanding of why the deal was lost. Another common reason is jumping to conclusions such as blaming the marketing department or thinking that the customer wasn't interested or that they couldn't offer enough discounts.
Service-based businesses (plumbers, bookkeeping, landscaping) are great businesses to sell. Typically, these are industries that are needed, and they already have an established client list – many under long-term contracts. This makes it appealing for a buyer to easily be able to take over without much disruption.
If you absolutely have to reply negatively to the customer's request for a discount, do so politely. Say you're sorry, but that the price you offered them is the best value package. Stand your ground without getting defensive or forceful, even if the customer insists.
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