Offer a Discount or Have Strategic Sales

Some businesses will give a customer a discount if they pay their bill before the due date. I have seen a discount of 2% if the bill is paid in ten days. This is a discount anyone should take because that is an interest rate of 6% a month, a good deal. How does this help you make more money, though? Are you attracting a customer who would not normally be interested in your product or service, because you offer a discount?

Do You Need to Offer a Discount?

I would not start offering a 2% discount unless I had first increased my prices by 2%. Why would you give up profit, unless you have to? What benefit do you hope to get if you offer an early payment discount. Will your sales increase if you offer this discount? A discount has the effect of actually lowering your prices.

Is this about cash flow? Are you having trouble collecting your receivables? You could get a line of credit so you can pay your bills before your customers pay you. The interest rate would be cheaper than the 2% off your revenue. If you don’t have the ability to get a line of credit, then this discount idea might be what you need. Recognize it is a pretty expensive method of collecting your money.

Charge More for Credit Card Payments