Avionics News March 2015 - 52

series

BUSINESS BASICS
B Y

G R E G

L A S L O

Discount dilemmas

How to protect your shop by protecting your prices

E

veryone loves a sale, including your customers.
prospect, capturing short-term benefits comes with longYet when it comes to cutting prices of the products
term consequences. "It's not particularly sustainable over
and services you sell at your avionics repair shop,
time, because, obviously, then you turn a customer that
only you feel that pain. Do it too often, and you can badly
would otherwise be driven by some other reason into a price
wound your shop.
customer," said Ted Hurlbut of Hurlbut and Associates, a
Yet the pressure to cut prices can get intense, and that's the
retail consulting firm.
real trouble with discounts - trimming bids to enable a sale -
This can cause several problems for you. First, when
particularly, when it's done out of fear, greed, desperation or
you rely on discounting, you're saying that everything is
some other human emotion. At some point, for the good of
negotiable, according to Hurlbut. You've made your product a
your business and your people, you
commodity.
must get it all under control and lead
Second, the action reinforces
with your head.
itself. You drop prices, and you
E ve r yo n e l o ve s a d e a l , b u t
Smart discounts are all about
fill the shop schedule. So you do
a go o d o n e o n l y w o r k s
strategy, which means there must
it again. Eventually, though, your
be something in it for you, too.
margins shrink until you can't keep
w h e n i t w o r k s fo r yo u .
Certainly, there can be, when you
the lights on. And you wouldn't
understand why it's a risky concept;
be alone; thousands of big-name
where, if you're going to do it, you
businesses have put themselves into
can make up for it; and where some of those discounts can
this spiral and never escaped.
actually help you, provided they're done wisely. With each
Third and fourth, once you take a step down the slippery
of these, there's an important thing to remember: As great as
slope, not only is it hard to raise prices later, but you also risk
a price break is for the receiver, it only works when it offers
engaging in a potential price war. "If you're in a situation
just as many benefits to whoever's cutting the deal.
where you have to compete on price, then you're in a
losing situation," Hurlbut said. "There's always going to be
Cutting the cord
somebody with deeper pockets out there." Or someone worse
As a general proposition, few businesses - especially
at business.
independent businesses - should cut prices. Yet it happens
Indeed, discounts also completely undercut any value
every day. When it does, those businesses teach customers to
proposition you've worked hard to create among your
focus on price alone, they ignore the value they provide, and
customers. Best service? Who cares? Most experienced
they hobble their operational flexibility moving forward.
technicians? Big whoop; just give me the same deal you gave
The price part should make you shiver. It's your profit
we're talking about. While discounting can nab a hot
Continued on page 54

52

avionics news

*

march

2015



Avionics News March 2015

Table of Contents for the Digital Edition of Avionics News March 2015

Point of Communication
AEA Now
The View from Washington
International News and Regulatory Updates
'Cell'-ular Changes
Member Profile
NextGen Connection
Avionics Corrosion Control
Member Profile
AEA Convention Information
Business Basics
What's Working?
Aviation Insurance 101
Legal Ease
A Conversation With...
Best Advice
Aviation Aces
Honoring our Heroes
What's New
Before & After
Marketplace Classifieds
Avionics News March 2015 - Intro
Avionics News March 2015 - Cover1
Avionics News March 2015 - Cover2
Avionics News March 2015 - 1
Avionics News March 2015 - 2
Avionics News March 2015 - 3
Avionics News March 2015 - Point of Communication
Avionics News March 2015 - 5
Avionics News March 2015 - AEA Now
Avionics News March 2015 - 7
Avionics News March 2015 - 8
Avionics News March 2015 - 9
Avionics News March 2015 - 10
Avionics News March 2015 - 11
Avionics News March 2015 - The View from Washington
Avionics News March 2015 - 13
Avionics News March 2015 - International News and Regulatory Updates
Avionics News March 2015 - 15
Avionics News March 2015 - 16
Avionics News March 2015 - 17
Avionics News March 2015 - 'Cell'-ular Changes
Avionics News March 2015 - 19
Avionics News March 2015 - 20
Avionics News March 2015 - 21
Avionics News March 2015 - Member Profile
Avionics News March 2015 - 23
Avionics News March 2015 - 24
Avionics News March 2015 - 25
Avionics News March 2015 - NextGen Connection
Avionics News March 2015 - 27
Avionics News March 2015 - 28
Avionics News March 2015 - 29
Avionics News March 2015 - 30
Avionics News March 2015 - 31
Avionics News March 2015 - Avionics Corrosion Control
Avionics News March 2015 - 33
Avionics News March 2015 - 34
Avionics News March 2015 - 35
Avionics News March 2015 - 36
Avionics News March 2015 - 37
Avionics News March 2015 - Member Profile
Avionics News March 2015 - 39
Avionics News March 2015 - 40
Avionics News March 2015 - 41
Avionics News March 2015 - 42
Avionics News March 2015 - AEA Convention Information
Avionics News March 2015 - 44
Avionics News March 2015 - 45
Avionics News March 2015 - 46
Avionics News March 2015 - 47
Avionics News March 2015 - 48
Avionics News March 2015 - 49
Avionics News March 2015 - 50
Avionics News March 2015 - 51
Avionics News March 2015 - Business Basics
Avionics News March 2015 - 53
Avionics News March 2015 - 54
Avionics News March 2015 - 55
Avionics News March 2015 - What's Working?
Avionics News March 2015 - 57
Avionics News March 2015 - 58
Avionics News March 2015 - 59
Avionics News March 2015 - Aviation Insurance 101
Avionics News March 2015 - 61
Avionics News March 2015 - Legal Ease
Avionics News March 2015 - 63
Avionics News March 2015 - 64
Avionics News March 2015 - 65
Avionics News March 2015 - A Conversation With...
Avionics News March 2015 - 67
Avionics News March 2015 - Best Advice
Avionics News March 2015 - 69
Avionics News March 2015 - 70
Avionics News March 2015 - 71
Avionics News March 2015 - Aviation Aces
Avionics News March 2015 - 73
Avionics News March 2015 - 74
Avionics News March 2015 - 75
Avionics News March 2015 - Honoring our Heroes
Avionics News March 2015 - 77
Avionics News March 2015 - 78
Avionics News March 2015 - 79
Avionics News March 2015 - What's New
Avionics News March 2015 - 81
Avionics News March 2015 - 82
Avionics News March 2015 - 83
Avionics News March 2015 - 84
Avionics News March 2015 - Before & After
Avionics News March 2015 - Marketplace Classifieds
Avionics News March 2015 - 87
Avionics News March 2015 - 88
Avionics News March 2015 - Cover3
Avionics News March 2015 - Cover4
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