Discounting – Christmas Deals or Don’ts??


It’s that time of year again when everyone is getting excited for the bargains they might find in the January sales, which if you ask me have been getting earlier and earlier in recent years.

But if you’re in business and are participating in the sales season, be it the recent Black Friday, Cyber Monday, Shop Local Saturday, Boxing Day or January sales, or anything else in between for that matter, have you really considered whether it’s the right thing for you to do in your business?

Sales and discounts have got to drive something more. Can you use a loss leader to gain new market share who you will then sell again to at a ‘proper’ margin? Are you getting rid of a slow moving line which is tying up your cash and warehouse space? Did it start as a high margin product which you are still making money on? Or maybe it’s a thank you for your A Grade clients. It matters less what your strategy is, than that  you actually have one. That your sales strategy is thought through, you know your numbers and have weighed the upside carefully against the downside.

Many retail businesses generate more than 50% of their annual income in the months from September to January, and some fail to realise that if they get their pricing and sales strategy wrong, they are running the risk of selling their way out of business and creating a cashflow problem which they may not survive.

Think about this for a moment: If your average margin is 40%, and you discount by 10%, then you have to sell 33% more just to stand still! So will your discount drive that much more sales? And how much more effort (time and money) will you have to put in to deliver 33% more sales?

Conversely, if your margin is 40% and you increase your prices by 10%, then you can afford to reduce your volume of sales by a full 20% while still making the same amount of money… guess which sales you are likely to lose? Definitely the more demanding ones!! So, reduce your sales volume by 20%, use the time saved to increase the value and service levels you deliver to your clients and concentrate on looking after your A Grade clients really, really well 🙂

If you’d like a little more on this, have a look at our video on the subject below, and as always, please do get in touch should you have any questions.

Let’s start a conversation 

    Subscribe me for updates and news from In Accountancy

    Related articles

    time to pay arrangement
    Limited Companies

    Time to Pay Arrangements: A Lifeline for Owner-Managed Businesses

    Are You Struggling to Meet Your Tax Obligations?

    More than 30,000 UK businesses were involved in some kind of insolvency action in 2023, which was an increase of more than 50% compared with 2021 according to an article in the Guardian earlier this year.

    And the economic outlook would suggest that despite the fact that we are no longer in recession, 2024 and 2025 will be a challenging year for UK small business.

    With this in mind we have prepared the following guide and associated video to help you understand what your options are with regards to agreeing what is known as a ‘Time to Pay’ arrangement with HMRC.

    Read More »

    Find out how we can help?

    Lectus scelerisque a donec tincidunt litora per eleifend eget ut sagittis conubia pharetra scelerisque dui ultricies duis parturient auctor adipiscing.


    Let’s start a conversation 

      Subscribe me for updates and news from In Accountancy