Here Is Why Apple Never Make Big Discounts

February 7, 2020

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I find myself often thinking about how companies choose to do their discounts. The question often comes back when I regularly hear people asking why apple never makes enormous cuts.

As one of the most profitable companies in the world, I thought there might be something more to their pricing strategy.

On the other side, Samsung can drop their prices by more than 70% on some of their flagships.

These are notable companies with complicated pricing strategies, but to answer a specific question, what does discounting do to your business?

I’ve researched the topic, and here is what I learned that I want to share with you.

Why do people look for discounts?

People often seek discounts because they want to get the best possible value for their money.

From a business perspective, it increases sales, which, most of the time, leads to higher profit in a short period. There are also other advantages like cleaning up inventory for a new product to come in. Or to get people’s attention overall.

People automatically compare value when they see a price tag, and if it matches the expected value, they are getting out of it, so when your price is lower, then it usually is. The actual value of your product can only match the price paid by the customer; because the customer was able to get your product for a lower price than your claimed value.

That will make it harder to convince a customer to pay a higher price in the future.

It’s a belief system that can put you in a hard position for future business because it creates an expectation for future discounting, which sets a wrong pattern for future chances to maximize margin.

It exposes a lack of confidence in your product

Even if you find it hard that the customer doesn’t value your product as you thought, when you choose to discount, it confirms for the customer that you don’t value your value proposition either.

Reasonably when you sell a product at full price, your margin will be higher than if you sell at a discount.

The profit margin you lose through discounting today has to be made up for in later times, causing you to exercise more sales effort and close more deals at a higher price to compensate.

You can convince people to buy your product with the price tag you are asking for, influence your customers with your message, tell them your story, and the reason it exists.

People don’t buy what you do; they buy why you do it. And what you do simply proves what you believe ― Simon Sinek

Stop selling your product to the wrong people, not everyone is a customer, and if you focus too much on trying to convert everyone, you will end up focusing on the wrong audience.

When pricing your product, don’t rely on opinions and thoughts only; try to get data; that can help you make more accurate decisions.

Only data can tell you accurate information about your customers. Acquire some data through analytics, tests, talk with your customers in real life; the more you understand them, the easier it will be to add value to your product or solution.

Don’t fall in love with the solution; fall in love with the problem itself. When you focus on the issue, it will be easier to collaborate with others. Because if everyone in the room shares the same understanding of the problem, then there will be more room for creativity and innovation, which will significantly add value to your product.

When showcasing your product, focus on the benefits and features that your product offers, touch their heart, tell your customers how buying your product will add significant value to their life.

And last but not least, don’t mention the price too early. Engage people and get them interested first.

Conclusion

It’s reasonable for your customers to expect a better deal.But you need to be at least aware of future consequences when you choose to discount. It can an intense degree impact profit margins, your product reputation, and customer loyalty towards your business.

Good alternatives are to become better at proving your product value by continuously adding value until it better fits with the price tag.

Do that through product development, brand value, storytelling, etc. And if needed, cut any unnecessary components on your product to better match what your customers are willing to pay.

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