Prices: The Art of Discounts

How do companies that permanently use large discounts and offers sustain their strategy?

Friday, February 23, 2018

In his analysis of setting prices, Ariel Baños, an expert on the subject, explains the elements that companies should take into account when offering discounts and promotions to their customers, warning how the cost assumed when providing a discount must be "shared", what kind of promotions should be avoided, depending on the business, and what limits should be established on the number of items that can be part of the discount strategy, among other things.

From the article "4 ways to offer discounts without losing money", from the founder of Fijaciondeprecios.com:

Association: Share the economic sacrifice of the discount among all the parties who benefit from the promotion: supplier, sales channel, credit cards, banks, etc.

Compensation: Make a significant discount on a high visibility product in order to generate traffic from customers who will also buy non-promoted items.

Selection: Avoid massive discounts, defining filters so that only "price buyers" access them E.g. discount coupons, specific days, online sales channels, outlets, etc.

Limits: Define reimbursement limits or maximum allowed purchases of promoted items, in order to avoid customers accumulating excessive stock and purchasing for resale.

More on this topic

Prices: The Myth of the Ideal Margin

August 2018

The search for the ideal margin is an aim that keeps a lot of business owners up late at night, but this kind of reasoning does not always help them be more profitable.

In general, those who ask themselves what price they should set for their product, start from an incorrect premise: using the cost as a starting point. 

How to Set Prices in 2018

December 2017

Planning adjustments to avoid the loss of profitability and redefining discount policies are some of the goals that companies should consider when deciding on their pricing strategy for the new year.

The last weeks of December are generally a good time to evaluate the results of the strategy implemented throughout the year that is ending, and to reevaluate plans for next year. Ariel Baños, a specialist in price management, recommends that companies commit to five principles in order to get the information needed to decide on plans for next year.

Pricing with the Customer in Mind

November 2017

Estimating the price a client would pay for a product first, and then aligning production and investment costs to that value, is the premise of the Price-led costing strategy.

Ariel Baños, a specialist in price management, explains that knowing in advance how much you can charge for a product or service, or at least having an estimate, is a key element of the Price-Led costing strategy.

When Should you Lower Prices?

May 2013

Three situations which, if they are happening in your company, indicate that you should lower prices.

By Ariel Baños,, President and founder of FIJACIONDEPRECIOS.COM

Is it too obvious? The quick and intuitive response would be that it is appropriate to reduce prices when sales are falling or the level of turnover is very low.

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