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Selecting a Discount Structure for Your Products

If you’ve been in business for any length of time, you know that discount models are used to encourage sales that otherwise might not happen. People will often buy something just because they think they’re getting a good deal on it.

Just open the Sunday paper and take a look at all the coupons that are available. Businesses continue to use those coupons because they work. 4Sale4Now.com allows you to put that same selling power to work for your online selling.

Which Discount Structure Should You Use?

There are discount structures from 2% to 50% to choose from. Which one you use is really a matter of running the numbers.

The first thing you need to decide is the lowest price you’re willing to sell your item for. After all, you’re in this to make some money, right?

Once you’ve established your lowest price apply each of the discount structures to that price. The beauty of this is that the site will do this process for you. All you have to do is put in your fair market price and select the discount structure that works best for you. Then the site will show you the final price based on your discount. Easy as that! Let’s say your niche is jewelry and you’re selling a ring. $99 might be the lowest price you’re willing to sell the ring for. Your discount structure might look like any of the following…

10% Discount

$99 would be 10% off $110. So, if you used the 10% discount structure, the price drops would look like this…

First price drop (2%) – $107.80
Second price drop (4%) – $105.60
Third price drop (6%) – $103.40
Fourth price drop (8%) – $101.20
Final price drop (10%) – $99.00

25% Discount

$99 would be 25% off $132. So, if you used the 25% discount structure, the price drops would look like this…

First price drop (5%) – $125.40
Second price drop (10%) – $118.80
Third price drop (15%) – $112.20
Fourth price drop (20%) – $105.60
Final price drop (25%) – $99.00

50% Discount

$99 would be 50% off $198. So, if you used the 50% discount structure, the price drops would look like this…

First price drop (10%) – $178.20
Second price drop (20%) – $158.40
Third price drop (30%) – $138.60
Fourth price drop (40%) – $118.80
Final price drop (50%) – $99.00

The above examples give you and idea of what the numbers look like for each of your possible discount structures. Get some input from your friends as to which discount structure you should use. You’ve already asked yourself what your lowest price is; now you need to ask yourself (and others) if the starting price is going to drive away interested buyers.

How do you really know which structure is best for you? You test.

Test, Test, Test… The Key to the Right Discount Structure

I’m a big fan of testing. It’s really the only way you’ll truly find out what works. You can go by your gut instinct, but even if you’ve been selling products for a long time, you can still be way off the mark. You can (and should) ask the advice of some friends, but, in the end, they don’t always give you an honest assessment or their opinion might not represent the general sentiment out there.

Your best bet is to test several discount structures.

Take an item from your inventory. Maybe you sell beach towels. Set up a sale on 4Sale4Now.com using the 10% discount structure. When that sale is over, put those same beach towels on a 25% discount structure. Finally, try the same beach towels at a 50% discount structure.

Make sure you track the number of sales you made and at which price drop.

Now, here’s the part that’s most important. At this point many people will decide to go with the discount structure that sold the largest number of towels. However, that’s not the most important thing here. What you need to look at is which discount structure added the most to your bottom line. Which one made the most money?

The 10% discount structure might make the most sales for you, but you might find that the 50% discount actually made you more money even though you sold less towels.

The point is, you’re selling at 4Sale4Now.com to make money and you want to make as much as possible.

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Filed under: Tips and Tricks,

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