Is it better to value-add or discount?

Value-adding and discounting are two different pricing strategies that businesses can use to attract and retain customers.

Value-adding involves offering additional features, services, or benefits to a product or service to increase its perceived value. For example, a hotel might offer a free breakfast, free Wi-Fi, or complimentary shuttle service to and from the airport as a value-adding strategy. By providing these extras, the hotel is able to differentiate itself from its competitors and attract customers without having to discount.

Discounting, on the other hand, involves reducing the price of a product or service to make it more affordable and attractive to customers. This is often used as a short-term strategy to boost sales or clear out excess inventory. For example, a restaurant might offer a 20% discount on mid-week reservations to encourage customers to book Monday to Thursday.

In summary, value-adding is focused on increasing the perceived value of a product or service, while discounting is focused on reducing the price to make it more affordable. Both strategies can be effective in attracting and retaining customers, but they are used in different situations and have different effects on a business’s profitability.

Personally, I prefer to value-add, as it maintains the integrity of your price and can have a lesser impact on profitability. For example, a restaurant can offer 20% off a meal. Assuming the average booking is £50, that would be £10 off the bill, netting the restaurant £40. Alternatively, the restaurant could offer a free bottle of wine worth £20 to the customer, which only costs the restaurant £5 in product replacement cost, thus netting the restaurant £45. The perceive value to the customer by value-adding is £10 more than the discount and costs the restaurant less.

Click here to view some other tips to attract customers without haveing to discount.


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