A word of caution about discounting. While using discounts can be great way of boosting short-term sales, there are a number pitfalls to consider too.
First ask yourself, why are you considering a discount and can your margin withstand the impact of the discount? If you are clearing out discontinued stock then that's one thing, but if you're trying to buy market share think twice.
Discounting for bulk purchases is relatively standard practice but, be clear at what level you pitch the discount.
Perhaps you are considering giving your customers a discount for an early invoice settlement. For instance, if you have a customer on 60 day credit, is it worth a small discount to get paid early on that invoice? The answer is 'yes' most likely, as this will mean the money owed comes back into the working capital much quicker. But be firm with this tactic - don't give the discount and then allow the client to use the credit facility as well.
There are two aspects of pricing that are hard to assess and then to manage. The same is true of discounting. They are, what are your competitors charging and what else could your clients spend their money on? So to sum up: when looking at pricing, remember discounting is a mix of:
If you consider these to determine your price, then you should be
hitting the right notes. Hopefully, you'll generate good profit
margins too!