Home – New › Forums › Money matters › To discount or not to discount in a downturn › Reply To: To discount or not to discount in a downturn
So let’s look at the logic – there is a market downturn and I discount my price because I think my customers can’t afford the old rate.
Why is my product or service now worth less than it was last month? Have my costs decreased? Or am I cutting my margins? Personally I get really annoyed when a service provider ‘slashes’ their rate in response to competition. They are telling me that they have been ripping me off but now will offer me a fairer price because they have to. I want them to stay in business and therefore want to pay them what they need to do that. If their price decreases without visible decreases in costs, what does that tell me?
Maybe my customers can afford my rates and I am just trying to think for them.
Are any of my suppliers doing the same for me? If not, why not? They are in the same downturn. I have not so far seen any decreases in rates for power, rent, telecommunications, software, hardware, etc.
When can I logically restore my rates? Or do I have to live with my new low rates now that customers realise that I can survive on them?
My conclusion is that I will not discount in a downturn, in just the same way that I did not increase in an upturn. My rates are calculated based on my expenses and what I want to earn. If either of those change, I will adjust my rates.
