March 9, 2018
FE, Education & Business Marketing: Quick, Effective, Low Cost Marketing
March 9, 2018
December 18, 2017
It’s quite easy to negotiate 20%, or more when offered an upgrade or renewal via email or other online method.
For example, a well-known satnav company recently sent me a reminder that my software was due for renewal. The cost was £49.50.
I wasn’t prepared to pay this amount so I ignored the upgrade offer and considered my options.
The software expired and I had no “live services” software running .. just maps and routes. It left me without info on traffic jams and that is the part I make most use of.
My option was to use my phone and the satnav app I had on it.
But the company wanted a second chance to offer me the satnav system and sent out another email.
This time they offered me approx 20% discount. Why do this? Probably because their view was that they either lost a sale or made one at a lower profit margin. And of course it was December and their year-end might be approaching.
I bought the renewal and obtained a 20% discount .. all without actually negotiating.
If you are thinking of using this tactic, beware.
Let’s imagine the profit margin for the software is 40%. By offering 20% they have halved their profit. And on occasion, I’ve seen discounts that mean the product or service is sold at a lost. Of course, that means that competitors don’t get market share .. but it does cost money.
The profit margins bite harder when the product or service entails real cost to provide. Whereas it could be argued that a software download costs (virtually) nothing to provide so margins are more flexible.
What could you negotiate online?
How would you deal with this sale if you were the retailer?