23 Pricing 2: Never discount

23

PRICING 2: NEVER DISCOUNT

Companies can choose to take a fl exible position on pricing or a fi rm one. Some companies never reduce the price of their goods or services. There are different reasons for this, and it can have different results.

The idea Set a fair price for your products and services. Explain to your customers you do not give discounts because you believe that you’re giving them good value.

The luxury luggage manufacturer (turned catwalk fashion brand) Louis Vuitton never give discounts for their handbags. They keep a standard range of classic styles, then create limited editions, which, once sold out, will not be manufactured again. They also run a well funded advertising and PR campaign to make sure that their products are sought after, and are seen on the arms of many an A-list celebrity.

At the more affordable end of the market M.A.C cosmetics do the same. So do Lush.

The bakery at the end of my street runs on the same basis, hand making daily batches which generally sell out by mid-afternoon. On Saturdays, there is a queue and halfway down the street from Parker’s the Bakers (Established 1912) because customers have learnt that they’ve to be there early to get what they want.

In practice • Balance economies of scale from manufacturing more than you need, with reducing the risk of overproduction by making slightly fewer products available than you forecast your customers would buy. The more experience you have, as in the case of long established organisations like Parkers and Louis Vuitton, the more accurate your forecasts are going to be. • When you build your brand identity on never discounting, never ever discount. • Only take this stance if you can be certain you’ll be able to stick with it.