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While most of us would be delighted to have more business than we can handle - if you can't meet a sudden surge in demand, then either your costs will increase in order to keep up or you'll actually end up losing business and disappointing your customers.
Rachel Brown recently discovered the price of having to meet an overwhelming demand as a result of a Groupon Offer for her cup cakes.
Charging less than cost price for your business service or product may be a way of attracting new business but as a long-term business solution it's not going to help your bottom-line. You're still having to work hard to produce the goods (or services) but you're potentially being paid less than it's costing you and in Rachel's case it wiped out any profit.
Not only are you making a heavily discounted offer but Groupon is then taking a significant cut off the price of the offer - meaning you may only be left with 10%, 15% or 20% of the full price.
While fulfilling the GroupOn offers you may potentially be turning away business at the full amount and you only get your money when the offer is fulfilled and the customers turn up.
You may think you're attracting new customers but many people will only go for the heavily discounted offer and never return. You're left out of pocket and without the potential of those hoped for future sales
If you're going to give your business away for free or for a greatly discounted price, know what it's actually going to cost you in real terms and think it through carefully.
Be prepared for the increase in calls and orders. Will you need more staff, more product or can you scale up your activity as the demand increases?
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