Holding a sale can be a great idea because it gets people talking about your company, brings in new business, results in impulse purchases, moves old stock, and it can be profitable. But a sale done wrong can be a disaster!

A company rep recently told me that his boss had decided to hold a sale on their primary product line at the beginning of the season, noting, “This means that everyone will stock up on it now, as we make less profit, and sales during the rest of the year will suffer. Customers will just think that we are overcharging them when the prices go back up to normal!”

True! That’s a sale planned all wrong!

Most companies have some products on sale throughout the year. However, what value does this have other than just getting rid of slow-moving or scratch/dent stock if it isn’t widely advertised as a sale? Use sales to bring in new customers and to get people talking about you!

Selling slow-moving stock frees up needed cash that could be better invested. Every item on your shelves represents unpaid rental space. The longer it stays, the more it costs you.

An advertised sale will bring more customers, and the bigger the sale, the more people you will need to work your counters. Don’t bring in new customers without showing them why they should do business with you - impress them with service!

Just cutting prices on high-volume products can be a bad idea. So if you’re going to hold a sale on such things, get your suppliers involved in lowering the price and buy in larger quantities, so you don’t have to take a licking on profit.

Do you want more service techs dropping by your stores? Continue offering coffee, donuts and maybe sometimes free hot dogs, but what about having a sale on the tools they need? People don’t stock up on tools when the prices are lowered. Work with your suppliers on this!

Schick and Gillette realized long ago that if they were to give away razors (or sell them at reduced prices), they would quickly recoup their losses and gain long-term revenue from the purchase of razor blades. If you have a product, such as high-efficiency filter boxes that will bring repeat sales of your filters, lowering the front-end profitability may result in increased long-term sales.

Learn from the supermarkets - they may sell holiday turkeys at a considerable loss, because they know that just getting people into their stores at that time of year will result in increased sales and profits. You can do the same thing, as long as the item you sell at a loss (or greatly reduced price) isn’t a commodity that will hurt your sales of it later on in the season.

Don’t just hold a sale to bring in more customers, but use it to impress new customers with your company and move old stock. Be sure you won’t be killing your sales of that product for the rest of the season and don’t take a licking on profit margin. Consider how to let the widest portion of your potential market know that you’re having such a sale.