You can’t discount your way to profit.

Price. Price. Price. Many entrepreneurs feels they could sell more if they simple lowered their prices. While there are times when price cuts are necessary you cannot offer discounts to customers that are below the market price for a long period of time without creating some serious problems in your business. If you are going to discount prices, then everything else in your business needs to be running efficiently and you need to have a plan for how you anticipate recovering the lost revenue that falls out of prolonged discounting.

When it rains it pours. Under Armour has found itself in the middle of a perfect storm that has crushed its bottom line and its stock price. CEO and founder Kevin Plank recently stepped down, the Under Armour e-commerce strategy is far below the market standards that customers have been accustom to using and pricing has been discounted in an attempt to increase marketshare. On top of these issues is another compounding problem that has made life worse for the folks at Under Armour – the coronavirus which is expected to negatively impact sales by $60 million in the first quarter of 2020. A business usually has one significant weakness that they are working to strengthen but the case of Under Armour, a series of challenges have all collided at once.

Should your business make the decision to discount its services below the market price for similar or competitive products/services, make sure the other parts of your business are working as well as they can so that the lost revenue your business gives up doesn’t have a disproportionate impact on your business. It’s hard enough to run a business on slim margins let alone run a business that is falling a part at the seams. Be intentional and be measured with your decisions.

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