Should You Discount in a Recession?

This is a loaded question.  Pricing strategy (one of your four P's of marketing) is often overlooked in marketing plans Your pricing stratgey is critical to your success.  Heavily discounting your products and services can de-value the worth of your products/services and recovering from this after the economy rebounds is difficult and can take years.

Additionally, price discounting to under-cut the competition is as equally harmful to the economy.  Imagine if your competition cut their prices by 25%.  You might feel forced to lower your prices, other competitors might feel the same.  Before you know it everyone in your industry is making 25% less than a year ago.  This will have a negative affect on the economy.  It has a trickle down affect from which it is hard to recover.

Granted in some cases discounting may have to be done.  The retail and restaurant industries are an example, where disposable income is limited and you do make decisions to cut back.

Other times, companies discount the front end of a product, but mark up the back end of the service.  Recently, I heard about a company who lost a bid, because their comepetition marked the product way down (almost at cost), but marked the installation way up. So - buyer beware - make sure you compare apples to apples.

I'm sure there are many opinions on this and we welcome yours.  If you know of any good resource articles on this, please post them on our blog.

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