Deciding whether to offer discounts to your customer is a difficult one.
It's a decision between value and volume.
Sometimes it can be a decision between potentially losing your business and seeing a huge influx of sales.
How much should I charge for my service?
The best way to figure out the charge for your service is to use the equation: time + costs + profit.
Time is the amount of time it will take you or your staff to complete the job, which you can charge at the salary rate of whoever’s doing this (if this isn’t decided yet, look at union or other industry guidelines for pay in your sector).
Next, add any direct costs incurred while providing the service, such as materials, travel expenses and accommodation.
Finally, add an appropriate mark-up that will cover a proportion of your annual overheads as a business (office rent, electricity, etc).
What are volume discounts?
These are a proven way to increase sales and gain customer loyalty. There are three main reasons for offering volume discounts.
- As an introductory offer to gain interest from new customers, or when first starting up a business, or offering a new product.
- Secondly, as an encouragement to buy in bulk on a single occasion.
- The third reason can be to encourage regular, returning sales over a longer period.
Occasionally, a volume discount purchase can be made up-front, with the supplier delivering the order piecemeal as and when the product is required by the purchaser. All options should be used wisely, especially if you don’t want to be seen as purely a volume discount operation.