Have you ever had one of those salespeople who thinks that giving a discount is the easiest, quickest way to make a sale? Of course, this person may be right, but what about the profit (your profit) they’re giving away?

If your product has a profit margin of 30 percent and your salespeople sell it at a 10 percent discount to make the sale, you’re losing one-third (33.333 percent) of your available profit — that’s a massive amount!

During a seminar for buyers of a large retail group with branches all over the country, an attendee stated: “My job is easy. I just let the salesperson make a full sales presentation. I ask questions and listen to their explanations. When they’re finished, I simply say, ‘I’d like to place an order with you, but your prices are too high.’ And I then simply sit there and enjoy myself, because the once-confident salesperson suddenly doesn’t know what to do or say next.

“With much less conviction and enthusiasm, they may repeat the benefits and features of their products, but most of them immediately offer me a lower price. I usually respond by saying, ‘You’ll have to do better than that!’  And more often than not, they do, in fact, do better than that. I get lower prices by just sitting there, enjoying the game.”

The buyer isn’t stupid. But you don’t have to lose.

You must protect your price and your margins. Teach your people not to hesitate or stutter when a buyer insists on a lower price. Teach them to hold firm to your prices. Sell value — perceived and real.

Less work, more profit

Can you work 50 percent less and earn the same income? You bet. Here’s how:

Suppose your company sells pumps at $10,000 per unit. Assume that your net cost per pump is $7,000. That means that the net profit on each pump is $3,000. If 10 pumps are sold at the full price, the net profit for your company will be $30,000.

What if you discounted the cost 10 percent? The total selling price for 10 pumps is now $90,000, but the net cost for 10 pumps remains $70,000. Your net profit has now decreased from $30,000 to $20,000.

If your company continued to sell at a 10 percent discount, you’d have to sell 15 pumps to achieve a net profit of $30,000. Here’s how it looks:

Sales             Discount          Gross Sales                 Net cost                        Profit

10                    0%                 $100,000                         $70,000                       $30,000

10                  10%                   $90,000                         $70,000                       $20,000

15                  10%                  $135,000                       $105,000                       $30,000

  • A 10 percent discount means your company must sell 50 percent more units (15 instead of 10) to earn the same dollars.
  • A 10 percent discount means someone has to work 50 percent harder to earn the company the same dollars.
  • By not giving discounts, the company can “work” 50 percent less and earn the same income.

In spite of this, you might still think, “But if I don’t give discounts, I’ll lose sales. Everyone gives discounts, so if I don’t, my customers will go to the competition.”

And you may be right. You may lose a few deals if you don’t give discounts. But the good news is you can afford to — and still make the same or more profit. Stand behind your price.