Pricing your service or products is a challenging thing to do. In reality, it's one of the elements that puts numerous companies out of business. Pricing your product or service for a daily deal offering is even tougher.
I was just reading today about a business that did a daily deal offer with one of the huge deal websites and it put them out of business, merely because they got overwhelmed with orders and didn't put enough focus on the price point and optimum quantity available. The business got overwhelmed and couldn't meet all the orders, applied for bankruptcy and then was taken control of by a rival who, to her credit, honored any client who had currently set up a consultation.
This story just goes to highlight how your daily deal price point is extremely important to the continued success of your organization. Running a promotion on a deal site can be a big success for your service, but you need to be sure you effectively plan for the deal.
We've likewise heard recently how some of the big guns in the deal space have actually been pumping up the 'regular price' of the merchant's offer in order to reveal a higher percentage to be saved. This is not a very honorable, or even legal, way to operate a deal website and in the end will ultimately trigger more damage to the site and organization than revenues produced; in bad press or lost clients ...
Well, the first apparent action is doing some due diligence research about the deal site and finding the responses to a few important questions:
- Q: What is the approximated redemption rate that purchasers typically redeem coupons? To put it simply, out of 100 sales, how many consumers might I anticipate to not ever redeem their discount coupon prior to the expiration date?
- Q: What is the estimated amount of traffic and exposure that I can expect my deal to get?
- Q: What would you say is a typical amount of sales that we might be able to plan for and achieve?
- Q: What kind of offerings have a few of our rivals run on your site? What were their price points? The number of discount coupons offered? Do you have any testimonials from them?
This info is an estimate because conversion rates and traffic depend upon numerous factors such as the e-mail blast that is utilized, type of offer, offer copy, how fantastic the offer is, what website is running the deal, and a myriad of other external components that include variables to the formula.
So, what are some ways in which to set up great deals without going bankrupt?
One way is to partner with another vendor nearby for more of a value-add deal. For example, a restaurant could partner with the frozen yogurt shop next door to provide a good deal on a bundle. This would allow both merchants to offer smaller sized percentage discounts in return for the value include of providing a bundled item that appeals to the repeat consumer as opposed to somebody who has actually never heard of either merchant due to the fact that they don't live anywhere nearby.
Another method would be for you to bundle a couple of your items together in order to offer more value and raise the price point.
Do not inflate your price points just for a deal promotion.
Most deal websites will come to you and merely recommend taking 50% -90%off of your service or product. Consider the cut that the deal website takes, and your margins are dropped down to next to absolutely nothing.
Before diving right in, you need to first crunch some numbers and visually map out how this offer will effect your organization. Figure. out an optimal number of vouchers or coupons that you are willing to sell.
Determine your actual expenses involved in selling the services or product and review lots of "what-if" scenarios. Offering coupons of your product or services in advance can be appealing since you are earning money prior to providing anything, however be careful ... This is not free money and you need to be prepared to fulfill the deal with exceptional service, due to the fact that as you know, if individuals have a poor experience visiting your service they are far more likely to discuss their experience with their good friends, Yelp, and social networks.
The last thing that any organization wants is to run an offer on a deal website and end up plastered all over the news since your organization is closing down due to the fact that you sold 11,000 coupons and have no possible way to deliver the product or service.