Having a sale does not mean that you do not make a profit if you manage it right.
When I first started out in retail I thought that the way you held a sale was to reduce your prices, promote your sale and get rid of old stock.
Simple, I thought.
But, NO, that is not the way a savvy business person makes money in their business.
It was several years and a few businesses on that I found out how to run a profitable sale in my business.
When I think back I don’t really know what shop policies were at that time about running sales and why they actually did. But I do know what they are now:
Quit stock but still make money!
You need to remember that
First Steps in Making A Profit From Your Sale
One might think that the first step is to decide on the stock that you want to get rid of. In essence that can be the case with some sales but even then that is not the first step.
Step 1. The FIRST STEP is to decide WHEN you are going to run your sale.
Timing your sale is very important and in fact, quite critical. You don’t want to be the last to have a sale because people will have spent their money. Being the first might be alright, but it is best to be in the first group rather than be the first. If you are the first you may not make enough ‘noise’ and attract enough attention to get the sales you are after so it is best if your customers are in ‘sale mode’ and are ready to spend money and that happens when there are several sales being held at the time.
Step 2. When you have decided WHEN you are going to have your sale you then need to consider WHAT you are going to sell. This is also a very important decision because it will affect the profit you make from the sale.
a) If your business is very seasonal it does mean you are going to have to try and quit stock so that you do not carry it over to the next year.
So here is what you need to do. I am assuming that you have not overstocked for the season, but just have some bits and pieces left. What you need to do weeks prior to your sale date is get hold of your suppliers and find out what stock you can buy at ‘dumping price’. In other words, they too will have end of season stock, but of course their end of season stock will be on sale months before you go to sale, so you need to make sure you are not too late to pick up some bargain pieces.
When you have these quality items that you have purchased at fire sale price you mix them in with your own stock to freshen up the look. Your new stock can be marked up, maybe even as much as 150% to meet the price of your own reduced price stock and therefore it means that over all you are making a profit from your sale.
b) If you have a business that is not seasonal you will have to work at selling cheaper priced products. To do this you may need to do some bulk buying, or if you make your own products you may bulk make some of your popular lines. With this system though you do not want to jeopardize your business so I would bulk make popular items, but just ones that you know do sell well. Don’t bulk make the most popular ones because you want to keep your most popular ones a bit exclusive so that your customers will still keep coming back for those.
Step 3. Now that you have decided WHEN and WHAT you need to decide HOW you are going to PROMOTE your products to make sure that they sell. Work out what is going to get the best exposure for you and who your buyers are.
- Are they people who cannot afford the full price,
- are they people who normally pay full price but would enjoy getting some a little cheaper or
- even holiday makers.
When you have figured all that out, target and prepare your marketing to start on time. Usually a few days before or at the latest, the first day of your sale.
Step 4. Display your goods in the absolute best possible way. Your sale only lasts a few weeks at the most so you want to attract the attention of your buyers.
- if you have a website don’t leave your readers guessing, use bold letters and colors to catch their attention
- if you have a display case make sure it does not look the way it usually does – fancy it up for the sale, use brighter colors and maybe some banners or poster stickers
- display your sale signs (even let them know a sale starts tomorrow, or the next weekend or whatever)
- make sure everything is priced to sell
- make sure everything has a clear selling price on it
- use incentives if you can – like, buy one get 50% off the second item
Although having a profitable sale does have some critical steps to it, it is the purchase of cheap stock to sell during the sale that makes you a profit. And that is why a sale should be organized well in advance and not be a last minute decision.
I believe that a business owner should try to have at least 2 sales a year and they should be listed on their 12 month marketing calendar. To hold more than 2 can be difficult which often means they are not run properly and therefore the results are not there.
If two is too much then hold 1. The most important point is that what you do is organized and promoted properly.
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