Reducing prices to attract customers may seem like an effective strategy, but, if done without criteria, it can seriously compromise the profitability and market positioning of companies. According to theMXE Group, reference in educational solutions for entrepreneurs, the indiscriminate granting of discounts can create a culture of devaluation of the product or service, in addition to putting pressure on the financial structure of companies.
"Companies that offer discounts without strategy run the risk of educating their customers to always expect lower prices", what affects the perception of value and reduces profit margin in the long term, alert Felipe Cintra, CEO of the MXE Group. He explains that, without a well-defined strategy, the practice can turn into a systemic problem, harming competitiveness and making it difficult for the company to differentiate itself in the market.
The trap of reduced pricing
Many entrepreneurs resort to discounts to overcome customer objections, without assessing whether the price reduction is aligned with the long-term strategy of the business. Small and medium entrepreneurs are the most vulnerable, because many times they lower prices to compete with large companies, compromising profitability and hindering expansion.
Cintra emphasizes that a discount can be effective when linked to a strategic objective,such as acquiring repeat customers or expanding networking. "If a businessman offers an initial discount linked to a long-term contract or the referral of new clients", he is creating value. But, if only lowering the price to close a one-time sale, is weakening your brand and harming your revenue, explain.
Strategic alternatives to avoid dependence on discounts
To maintain competitiveness without compromising pricing, the specialist suggests alternatives that strengthen the company's positioning
- Define clear objectives:each discount must have a well-structured purpose, such as customer loyalty or increasing the average ticket.
- Link discounts to concrete actionsoffer discounts for customers who make bulk purchases or choose to pay in advance.
- Highlight value before pricefocus on the product or service differentials before discussing values.
- Create loyalty programsoffer additional benefits for recurring customers, without compromising the profit margin.
"Financially healthy companies understand that price is a consequence of perceived value". A well-positioned and well-communicated product or service justifies its value in the market without the need for frequent price cuts, concludes Cintra.
