Finance: How To Make A Profit Despite Rebates
Offering rebates and other price reductions can help you attract new customers or keep existing customers more loyal to your business. But it’s also playing with fire. Once customers have gotten used to a discount, they often demand higher and higher discounts. There is also the risk of a discount battle with your competitors. To avoid this, you should follow a few rules.
Finance: Preparation of the rebates campaign
Before you give a discount, you should find out all the important data and costs related to your products. When calculating your discount campaigns, you should consider the following points:
Make sure that the respective discount for all products or services is fully included in the price calculation. The exact calculation of discounts can be carried out with our discount calculator.
Check whether you or your employees are currently granting discounts that are not included in the calculation, or whether you are granting higher discounts than calculated. If this is the case, you should reduce the rebates or, if possible, lower the costs in order to realize the desired profit.
Do not offer your customers blanket discounts that are not limited in time, e.g. always 10% on all items.
It is better to link a rebate form to special events, times or company situations and limit the promotions to a specific time. In this way, your customers perceive that you want to express a special appreciation with price reductions.
Finance: Reasons and measures for discounts
Always remember the purpose of discounts. With discounts, you want to show special appreciation to certain customers, for example, because they have bought from you for a long time or often. If you always give all customers the same discount, you will get used to it. Therefore, avoid constant discounts and blanket discounts.
Do not grant any discounts that you have not calculated. Instruct your employees to do the same. Unplanned or higher discounts than calculated destroy your profit disproportionately and are absolutely taboo. The ideal tool for calculating discounts is the discount calculator. It is a practical Excel tool that calculates the discounts precisely for your business.
Set a minimum price for each item or group of items that you must achieve in order to still make a profit with the product.