Discounts Aren’t Necessary
We’re not an ordinary custom closet company – clients receive our best, fair price up-front. No large discounts needed.
By Chad Simper on February 27, 2017
A discount industry
During the custom closet shopping process consumers see discount options from nearly every company. Spring Cleaning, Memorial Day, Back to School, Get Ready for Winter, Black Friday, Cyber Monday, Christmas is Over, you’ve probably seen them all. Open any mailed discount packet or book and you’ll probably see a custom closet company offering 20-50% off. Work for a large company or have a membership to a big buying club? You likely get a discount.
We even sent discount mailers when we started in 2009. It was a great way to get our name in front of prospective clients, and we hoped offering a discount would encourage purchases since we were a new company without word-of-mouth and other types of business referrals.
Consumers have been conditioned to expect discounts from custom closet companies. The catch, though, is that those companies have increased their “list” prices enormously to remain profitable after the discounts. And since many clients don’t know to ask for a discount they pay the exorbitantly high pre-discount price.
Why discounts work
Discounts and promotions exist to create the perception that a customer is saving money. They often encourage consumers to “act now” or miss out and are offered based on the theory that the consumer wouldn’t have otherwise purchased without the discount. But the customer isn’t always saving money.
Bad discounts, or those that don’t actually save the consumer any money, tend to be those that are constantly recurring. If a company is always offering a discount it’s safe to assume they have increased prices so they can offer 10%, 20%, 30% or even 50% off.
Another sign that a company’s prices are higher than necessary are “one discount per transaction” clauses that prohibit consumers from using more than one type of discount. If you have a discount coupon and you have a big buying club membership, you’ll probably only be able to use one or the other, but not both.
Certain types of discounts, such as overstock sales or inventory reductions, do tend to save consumers money since these are often one-time. The business would rather make less money on the products than sit on them or possibly never sell them.
We provide a discount to clients who choose to pay by cash or check. When a client pays by credit card we have to pay a 2% to 3.5% commission to the credit card companies and banks. The laws and credit card agreements that regulate these commissions are complex so we include the commission in each of our project proposals rather than as a “surcharge” for clients that choose to use a credit card. When clients choose to pay by cash or check our discount offsets the amount included in our proposals for credit card commissions. With most custom closet companies, cash and check paying clients aren’t provided a discount so the cost savings to the closet company subsidizes the credit card paying clients, and their bottom line.