Transcripts
In this episode of Live with The Pricing lady, I want to talk to
Speaker:you about whether or not you should be offering black Friday deals.
Speaker:This is a question I get quite often, and I have very strong feelings
Speaker:about whether or not small businesses should be getting into this game.
Speaker:And that's what I'm going to share with you today.
Speaker:Sit back, relax and enjoy the episode.
Speaker:Hello, and welcome to Live with The Pricing Lady.
Speaker:I am Janene your hostess.
Speaker:This show is all about helping you build a stronger, more profitable
Speaker:business on your own terms.
Speaker:We talk about all things, pricing -tactics, and strategies here to help you
Speaker:build your competence and your confidence when it comes to pricing in your business.
Speaker:And today we're going to be talking about a very special topic.
Speaker:This is a question I get so often.
Speaker:And as I said before, I have very strong opinions about black Friday offers.
Speaker:And that's what I want to share with you today is help you to
Speaker:explore and understand whether or not offering black Friday deals is
Speaker:the right thing for your business.
Speaker:Before we get into that.
Speaker:Let me also remind you that my last cohort of 2023 for The Fair Price Formula
Speaker:is starting at the end of November.
Speaker:If you'd like to join us, head on over to thepricinglady.com/setmyprices and get
Speaker:all the details and get registered there.
Speaker:Now let's get into the show.
Speaker:It's that time of year we're so many businesses are thinking
Speaker:about offering black Friday deals.
Speaker:I even had a web class recently where somebody asked me if I was
Speaker:going to ask, offer them as well.
Speaker:It made me realize that I've actually never addressed this topic
Speaker:in one of my podcast episodes.
Speaker:I thought, what a perfect time to do it, because I know a lot
Speaker:of you are thinking about it.
Speaker:Here's my thing about black Friday deals.
Speaker:Now, if we look at the industry in which this whole thing started and why it
Speaker:started, it gives us some of the answers.
Speaker:They started in the retail industry and me having grown up in the US
Speaker:and you probably are aware of that, this whole concept came from there.
Speaker:This was a tactic that was used to get people out of the house on a day
Speaker:when they're not working at least most people when they're not working
Speaker:and get them into the shops to get started on their Christmas shopping.
Speaker:And that was the retail industry's way of really getting people
Speaker:off the sofa and into the shops.
Speaker:Now it has expanded and exploded into a global phenomenon.
Speaker:When I first moved to Switzerland in 2001, they never had anything like
Speaker:a breakfast black Friday sale here.
Speaker:Actually in Switzerland until like the last two or three years, they
Speaker:only had sales two times of year.
Speaker:In June.
Speaker:May June time.
Speaker:And then after Christmas, You know, basically to the middle of January, those
Speaker:were the only times they ever had sales.
Speaker:And then.
Speaker:Either just before or just after COVID hit, we started seeing black Friday sales
Speaker:here in Switzerland and, and always made me laugh because you know, the concept
Speaker:compass from something that is totally unrelated to Switzerland in itself.
Speaker:But yes, we even have them over here in Europe.
Speaker:And now with the internet, of course, we also have cyber Monday, which is
Speaker:an online version of black Friday.
Speaker:And that is also very prominent, not just in north America, but across the globe.
Speaker:Now, when I think about.
Speaker:Offering black Friday deals for small businesses.
Speaker:I start to get a little bit nervous.
Speaker:You have to remember that these retail shops, they're talking large volumes.
Speaker:They're also talking about shifting a lot of inventory.
Speaker:Now that may apply in your small business, but places where I don't
Speaker:really see it applying as much is in service-based businesses, especially.
Speaker:I see a lot of coaches and therapists and people offering services who
Speaker:also offer Black Friday sales.
Speaker:It makes me wonder.
Speaker:What's the real business purpose behind that.
Speaker:And is it really helping their business or not.
Speaker:Let's look at a few questions that you can be asking yourself so you can decide if
Speaker:it's the best strategy for your business.
Speaker:So, first of all, you want to ask yourself, is this aligned with my
Speaker:brand and the values of my business, but also your personal values.
Speaker:So some cultures have a deep.
Speaker:Let's say practice of wheeling and dealing and discounting.
Speaker:So it may be for your target customer group or part of the world that
Speaker:you're in that, you know, this is something that is very much aligned
Speaker:with the values and the practices in your industry or personally for you.
Speaker:iF you're positioning yourself as a premium brand for something, and
Speaker:then offering deep discounts on Black Friday, just because it's the
Speaker:last Friday in November, that it doesn't really make much sense.
Speaker:From a logical perspective it would actually erode your value perception
Speaker:as a luxury (premium) brand.
Speaker:If you're trying to play at the premium or the luxury end of the spectrum you might.
Speaker:Let me say you might proceed with caution for sure.
Speaker:If you were trying to decide whether or not to do that if one of your values
Speaker:is transparency, for example, in your business, and you're transparent with
Speaker:your prices and then you come along and one random Friday of the year, you
Speaker:offer a deep discount, then you're kind of getting, telling your customers that
Speaker:there's actually more profit in there than maybe they thought, and that you can.
Speaker:No.
Speaker:And that you're capable of offering that while still making money.
Speaker:Then they may question the transparency.
Speaker:So again, this are two examples of what I mean by making sure it's
Speaker:aligned with your brand and or your business or personal values.
Speaker:Next.
Speaker:And you knew this was coming and usually it comes first, but I put
Speaker:it second here today is who is your target customer right now?
Speaker:Just because customers want to get a cheaper price.
Speaker:Does it mean you have to give it to them?
Speaker:If your target customer is people who are looking for the
Speaker:lowest offer, the lowest price.
Speaker:Then it could be beneficial to have a Black Friday sale, especially if
Speaker:your competition is also offering it.
Speaker:I'm not saying you should.
Speaker:I'm just saying you could.
Speaker:If at the same time, if your customers are looking for something more prestigious or
Speaker:looking are interested in paying more for something, because sometimes customers
Speaker:are then, if they're looking really for quality and high quality, then offering
Speaker:black Fridays discounts actually kind of gives the opposite message of that.
Speaker:So you might not want to do that.
Speaker:So have a look at who your target customer is.
Speaker:If you've developed a bio or an avatar of who they are, I like to
Speaker:give a target customers and name.
Speaker:So if we say, you know, what would Steve want or what would Susan want?
Speaker:Then you can always make the more personal.
Speaker:And then think about it in the context of how would they perceive that.
Speaker:Not just that they might be excited about getting a discount, but with
Speaker:that have an impact on their perception of the value of what your product or
Speaker:your service or software delivers.
Speaker:Another reason you might choose to do it is because that's what
Speaker:your competitors are doing.
Speaker:But I put a big, big word of caution here about this, because just because
Speaker:your competition is doing it doesn't mean it's the right thing for you.
Speaker:Yeah.
Speaker:So if you're playing in a really cutthroat business, you may choose to do that.
Speaker:But then you also have to be aware that you may be getting yourself into a price
Speaker:war situation if you're not careful.
Speaker:So there are pros and cons to doing that, to following the competition.
Speaker:If you're the market leader, then in this case, you might be
Speaker:leading everybody else, right.
Speaker:With what you're doing.
Speaker:But it could be an indication that it could be something beneficial to you.
Speaker:The next thing is it has to make good business sense.
Speaker:And this is where I see most small businesses, instead of looking at
Speaker:this from a business perspective, like if I do this, I have the
Speaker:potential to get this, and I can ensure that I can get this out of it.
Speaker:If I do X, Y and said, yeah, they don't take the time to really think about it.
Speaker:They just throw a special offer out there and hope that people will take advantage
Speaker:of it, but they don't actually know if it makes sense for their business or not.
Speaker:So a few years ago, I had a client.
Speaker:She sent me a list to review and it was the discounts that she was
Speaker:going to offer throughout the year.
Speaker:And when I first started, you know, to myself, I had a little chuckle
Speaker:about it because I thought, okay, we haven't even set your price list and
Speaker:you're already, you know, lowering the prices and offering discounts.
Speaker:So let's, you know, let's take a look at this.
Speaker:So when we got on a call, our next call, You know, I asked her, okay,
Speaker:what's the reason behind these.
Speaker:And she was like, well, I see everybody else is out there doing this.
Speaker:And so I thought I need to as well.
Speaker:And I said, well, what's the business purpose behind it?
Speaker:What are you trying to achieve by doing it?
Speaker:And she said, well, I thought, you know, I just pull in a few customers
Speaker:at different points of the year.
Speaker:I said, okay.
Speaker:But, you know, we did our planning with this price.
Speaker:So now we need to actually adjust our planning to the price that
Speaker:you're actually going to be selling out a good portion of the time.
Speaker:At least a weighted average between your list price and the special offer prices.
Speaker:And when we took a look at that math, it really drove home.
Speaker:The point that every discount you make has an impact on your profitability.
Speaker:And that's something that you need to understand as a result of our conversation
Speaker:and our strategizing and thinking about, does this make good business sense?
Speaker:She decided to do away with most of them because it wasn't really
Speaker:going to help her business.
Speaker:And because it didn't really fit the target customer that she was looking at.
Speaker:So think about whether or not it makes good business sense.
Speaker:So those are the four things that I want you to reflect on as you're thinking
Speaker:about whether or not to do this.
Speaker:Now, what are good business reasons to do this.
Speaker:So for example, if you're going to do 50% of your volume through
Speaker:black Friday sales, then, okay.
Speaker:Yeah, you could, you kind of got to do that in order to get the volume.
Speaker:Right.
Speaker:So if volume, if you're really going to pull in a lot of volume,
Speaker:then that's a good reason to do it.
Speaker:If you're going to pull in two or three customers, it's probably not
Speaker:worth your while, and it's probably business, you would have gotten any how.
Speaker:And so basically you're just giving money away for free.
Speaker:Right.
Speaker:And then it's not such a good decision to do.
Speaker:If you can sell enough, additional volume with such a discount that you
Speaker:actually make more profit, then that's another good business reason to do it.
Speaker:Right.
Speaker:So.
Speaker:Again, in order to understand both of these two things, there is one
Speaker:very critical thing that you need to do, which most people don't do.
Speaker:And that is if you know me you know what I'm going to say.
Speaker:Do the math.
Speaker:That's right.
Speaker:You have to do the math.
Speaker:Sit down, do the math and understand what it means for your business.
Speaker:Now I've got a tool kit, a pricing tool kit on my website.
Speaker:I'll put the link in the show notes.
Speaker:And in there is a discount calculator.
Speaker:And with that, you can very quickly, I mean, within like 30 seconds, understand
Speaker:how much additional volume you would need to sell with a certain level of discount
Speaker:in order to break even on gross profit.
Speaker:And that should be your go-to tool whenever you're
Speaker:thinking about discounting.
Speaker:But especially if you're thinking, ah, I'm going to sell more.
Speaker:And so I'll make more money.
Speaker:If you're thinking that, then you need to go grab that tool kit
Speaker:and use that calculator in there.
Speaker:That's what I wanted to share with you in this episode, let's recap.
Speaker:If you're considering offering black Friday deals in your business, you
Speaker:need to treat this like any other decision you're making in your business
Speaker:as a strategic business decision.
Speaker:And here are the four questions we said, you should be asking yourself.
Speaker:First of all, is offering those deals aligned with your brand, your business
Speaker:values and your personal values.
Speaker:Second of all, does it fit your target customer and how will
Speaker:it impact their perception?
Speaker:Of value.
Speaker:Third, what are the competition doing?
Speaker:And just because they're doing it, does that really mean you
Speaker:should be doing it as well?
Speaker:And fourth, does this make good business sense?
Speaker:If you can answer those four questions, it'll help you hone in on whether or
Speaker:not this is the right decision for you.
Speaker:But do make sure if you choose to do it, that you sit down and do the math.
Speaker:That's the last tip for this episode, because the math will help you
Speaker:understand what it really means for your business and whether or
Speaker:not it is a good business decision.
Speaker:I wish you a great day.
Speaker:If you have any questions at all, you can always reach out to me@thepricinglady.com.
Speaker:And book a call with me there.
Speaker:We can talk about what's going on with pricing in your business
Speaker:and how we might work together.
Speaker:I wish you all the best.
Speaker:Have a great day and enjoy pricing, my friend.