How Can Discounts Increase SMB-Sales and Revenues

When your small business is at the beginning of its journey, every sale you make is vital for the duration of that trip. This is where discounting comes on stage. Offering your goods and services at lower prices is a great way to start generating a steady income. Also, it’s a practical incentive to make people aware of your existence and win more leads.

Still, discounting without a prior analysis can be counterproductive. That’s why we’ve put together a practical guide on adding discounts to your business agenda.

Write down the objectives

Before you advertise a single discount, you need to write down the objectives of your discounting strategy. If you’ve just launched a business, you definitely want to trigger your sales. So, incentivizing the sales process is a great reason for giving discounts on your products.

Apart from that, it’s also imperative to gain some repeat customers. When a first-time buyer is welcomed by a discount, they might be more inclined towards coming back for more.

Closely related to that, lower prices will help you acquire new buyers. So, giving discounts can make mere visitors into first-time buyers, and then those customers will become repeat buyers.

One of the justified goals of announcing discounts is to clear your warehouse from the old inventory. As new items keep rolling in, your old products will just take the precious storage space.

If you have any (or just one) of these reasons, you can start offering discounts on your products.

Calculate the profit margins

You have to bear in mind that discounting is meant to make a profit. The fact that you’ve lowered some prices doesn’t mean that these products shouldn’t bring any earnings.

Therefore, it’s important to calculate the profit margins when you’re considering discounts. The variables you need here are the price you paid per item of the product you want to give a discount on, the regular price and the discounted amount. Logically, the discount shouldn’t be lower than the price you paid for it. This Shopify margin calculator can come in handy in setting your profit margins.

Another important hack when promoting your discounts is to keep your marketing expenditure as low as possible. It would be ridiculous to spend more money on advertising than you make on discounted products. Because of that, concentrate on the already existing, affordable marketing channels, such as social media, email lists, and your registered customers. When drafting email newsletter on discounts, make sure to write these emails in a professional manner.

Further, even if your discount margins can’t ensure profits on those products, nudge the buyers to buy additional products at regular prices.

Let’s say that a customer has just bought a discounted jumper from your website and that purchase hasn’t brought any profit to you. Feel free to send them a thank-you email after a few hours and offer them a jacket or another similar item that would have a positive profit margin. Post-purchase communication is an efficient method for reminding your customers of your brand and inviting them to repeat their purchase.

Indulge in volume sales

Opting for discounts will generate various benefits when you work with volume sales. In a nutshell, this means that you buy and sell goods in bulks.

Still, if you’ve just founded a business, you might not have enough assets to buy products in bulks. What you should, in that case, is narrow down the number of products your business works with. This will open some financial space for getting volume goods and putting them on volume sales. After all, that’s how most offline traders make profits – they buy a large number of items at a lower price and resell them at higher prices.

When making larger purchases and sales, it’s important to do your invoicing properly, so as to avoid any accounting and taxation issues.

To cut a long story short, offering discounts on items sold on volume sales will help you make your initial business profits and establish a steady cash flow.

Set your discount strategies

When you’re about to start a discount campaign, make sure to weigh the pros and cons of each strategy you can use for it. Here are three most widespread tactics that small business owners use for their discount actions:

Seasonal offers

The end of the year is the perfect time for offering discounts since people generally spend more money in the pre-Christmas season. What’s important here is to prepare for November and December on time. Start devising your sales and discounts strategy right after the summer season, so that you prepare a catalog for the end of the year.

The other period for discounts is the beginning of summer. This is the part of the year when many people are planning their vacations, so use that opportunity to increase your sales and generate some revenues.

Groups of products

Some marketers decide to sell several products together. These groups of products are also called product bundles.

What you’re going to put into a bundle depends on the number of products you have in stock, as well as on their compatibility.

For instance, cosmetic products can easily be bundled together, since they’re often used together. The major thing here is to highlight that each of the individual products offered in that bundle will cost less than what it would cost if it was sold separately.

Also, sometimes you can sell together two products of the same kind, in case you want to accelerate their sales.

Discounts for advance payments

In some fields, it’s practical to offer clients a discount in case they make an advance payment. For instance, if your business is selling services, you can offer your customers to pay the entire annual subscription in advance and get a discount.

For example, Web hosting companies, online storage providers, digital agencies, and other similar businesses can use this discount-promoting tactic to attract more customers and improve the cash flow.


Discounts can help each kind of business to increase their sales and generate more leads. Be it a newly founded small business or an established brand, offering products at lower prices always yields some benefits. Those perks will depend on the goals of your discount strategy, so do set them in advance. Also, you should pay attention to the time of the year when you’re going to launch discounts and analyze the types of products that should be bundled together. All these preparatory works will result in a more efficient discount action and higher revenues for your business.

Mark Thomasson
Mark is a biz-dev hero at Invoicebus - a simple invoicing service that gets your invoices paid faster. He passionately blogs on topics that help small biz owners succeed in their business. He is also a lifelong learner who practices mindfulness and enjoys long walks in nature more than anything else.
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