Tuesday, September 27, 2011

Don’t Be Afraid Of Motivational Or Discount Pricing

There is a difference between a buyer haggling with the caterer for a lower price and a caterer offering some sort of discount. Haggling happens on the spur of the moment by a shopper. Discounts, on the other hand, are explained to the buyer in advance of their making a decision. Discounting gives buyers a sense of gaining value to the point that the buyer is motivated to make a purchase more quickly and also limits their “haggling”.
Discounts are offered either openly in marketing messages or one-to-one during a sales presentation. A caterer can have multiple discount programs at the same time—but remember that discounts lessen the profitability for the caterer unless the price of the catering is already inflated.
The smartest discounting is when the actual price of the menu is increased beforehand by the same percentage of the discount being offered to the buyer. If you want to offer a 10 percent discount and yet achieve a price of approximately $20 per person, then the pre-discounted price would be at least $22.
Here is a list of situations where a caterer could offer a discount:
·   For being a regular buyer.
·   For buying an order over a certain volume plateau.
·   For buying two orders in one week.
·   For buying two orders in one month.
·   For buying on a certain day.
·   For ordering early.
·   For ordering earliest.
·   For picking-up the order.
·   For using a Fax or email for ordering.
·   For not using a Fax or email for ordering.
·   For ordering two orders at once.
·   For giving you a referral.
·   For letting you use their testimonial as a reference.
·   For paying COD.
·   For paying a 50 percent deposit.
·   For paying the entire amount in advance.
·   When paying with a credit card.
·   When not paying with a credit card.
·   When they give you a reference letter after the event.
·   When they mention you on the invitation or in the program.
·   When they get your name mentioned in the media.
·   When they give a certain gratuity to your staff.
·   When they pay the rental company directly.
·   For an early signing of their agreement.
·   For catering that starts after or before a certain time of the day.
·   For catering purchased in the slower months.
·   For self-service catering.
·   For full-service catering.
·   When they take care of their own bar.
·   When you get the mailing list information of their guests.
·   When they put out a sign or other notice about your company.
·   When you are permitted to send the guests a letter before the party.
·   For using your rental company.
·   For celebrating your company’s fifth anniversary.
·   Because you are a manager, and not one of the regular salespeople who earn a commission.
·   If they are referred by one of your regular buyers.
·   When your company has made its sales goals for the month.
Don’t buy back the business. Discounting is fine up to a point, but when a caterer sells menus that are below all logical margins for no valid reason, they are basically buying back their own catering. This leads to financial problems.


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