Category Archives: Income Management

How do you increase profit when everyone is ‘Discounting’?

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When Gerry Harvey was answering a question during the toughest moments of the retail ‘recession’, if Sales had become a permanent feature of all retail outlets. He answered, and I paraphrase:

“The secret to successful retailing is not just discounting, anyone can do that, but getting the customers into your store with discounted products and selling them the benefits of the better products with higher margins in store.”

So how does this apply to today’s property sales market?

Property is all the rage in the media, headline grabbing results in Sydney, are setting the tone for the country, but not everyone is enjoying the stronger selling conditions of Sydney, why?

Two Factors: 1) Low numbers of Stock, and 2) Discounting in the market by agents trying to get a listing.

Inexperienced operators, or the more tired operators are justifying their discounting because properties are selling quickly and not requiring a lot of time. Their thinking is “I’ll do it for 1.5%+GST because it will still be $10,000.”

Smart agents realised, that by showing the vendors they were willing to meet the market for an average result, they could ask for an incentive or “kicker” if a better than expected result was achieved. So rather than “just discounting” their fee to 1.5% +GST they pick a price point and ask for a higher%. The vendors are happy to agree to it, because they know they will have achieved their minimum expectations, and the rest is upside.

This is what Gerry Harvey was referring to when he pointed out the difference in retailers, providing a service to the customer, rather than flogging old stock at a discount.

I could mention a number of my customers that have enjoyed great commissions for great sales results, where everyone was happy with the outcomes. In fact, they have increased their average % commission fee as a result, even though they agree to “discount” and get the business. That’s smart business operating. The Live Bookkeeping Way.