November 08, 2018

You Need To Move A Lot Of Units To Make The Math Work

"The Industry", largely comprised of your vendor partners, wants you to use discounts / promotions to tickle the buying bone of today's price sensitive customer ... or so they tell you. Just look at the lather they get themselves into talking about Cyber Monday, for instance.

But is discounting right for your business?

You need to move a lot of units to make the math work.

Here's our example from yesterday, taken one step further down to contribution. Look at how many additional units you have to sell at a 50% gross margin and 20% off in order to make the numbers work.

At just 20% off with a 50% gross margin and a $3 cost per item for pick/pack/ship, you need an 83.3% increase in units (which nets out to a 46% increase in demand) just to make the math work.

Just let that sink in for a moment.

In fact, let that sink in for the weekend.

I'll come back to the topic next week, ok?

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