Avionics News March 2015 - 55

buy the full deal, but they've chosen
not to. In the meantime, you're training
them to see that those services have
value, too.
When it comes to what you don't
want to cut, that's simple: You can't
discount products where you offer
a lot of value, according to Bergen.
This means discounting only what
your competitor is really offering, and
charging full price what only you do.
That way, you still keep a basket of
products and services in your shop that
have a workable margin, Hurlbut said.
Strategic discounts
Beyond special pricing or
restructuring your service deals, you
have a few other discounts worth
considering. But again, these are
strategic - there's always reason and
rationale behind them.
Of all the ways to discount, Hurlbut
considers the package discount to be
least objectionable. With this, you're
accepting less money on a bigger
purchase because, frankly, your
costs for making that sale are lower.
Indeed, one sale of $50,000 costs you
less than 10 sales of $5,000. "There
is some rational basis for it, and
it's incentivizing the multiple sale,"
Hurlbut said. Besides, a customer often
expects it, and justifiably so.
Orphaned products, or those about
to be replaced by new models, offer
another opportunity, according to
Hurlbut. In this case, you're trying to
move existing inventory before it loses
its saleability, and you have to get rid
of it quickly to maximize your cash
recovery. That's true, too, for inventory
that just didn't sell as well as you'd
expected. Once you've identified these
dogs, deal with them immediately and
deeply; these products are toxic because
they're keeping you from investing in
inventory that still has traction - or that
you'll order at an upcoming show.
Start aggressively - and get more

aggressive - to get as much out the
door as quickly as possible. "The idea
is to move through as many units as
early in the process as you can, and at
the lesser discount, and not be stuck
later with a larger percentage of the
goods at a much greater discount,"
Hurlbut said. Margins on these
products barely matter; you're looking
to recover as much as you can in the
shortest time possible. Still, if this has
been a chronic problem, recognize
you may have a business issue, not an
inventory one.
Where special discounts do fall
short is when they're offered for cash
purchases, Hurlbut noted, particularly if
it's only a way to avoid your credit card
processing costs. Again, this discount
plants the seeds that your prices are
flexible, and often, a 3- or 5-percent

deal isn't enough to incite a purchase
(that usually takes 15 percent). You're
simply not moving the customer,
Hurlbut said, even if the "cash" flow
is nice.
Whatever you decide to do, don't
be afraid to try something, as long as
it makes sense. It will either work,
or it won't. If it doesn't, shut it down
and try something else. Just recognize
that your discounts need to be limited,
that you need to maintain your shop's
overall margins, and that you need to
protect the value you offer customers
who appreciate it. If you do all three,
these discounts can help you stay
competitive and grow. In the end,
strategic discounting gets back to the
basics of business: Everyone loves a
deal, but a good one only works when
it works for you. q

Keeping whatÕs in front
of you

BRIGHT

¥CRT & LCD EFIS Primary Flight Display Repair
¥FMS / FMC Controllers
¥TCAS / ACAS / Mode S
¥EXCHANGES AVAILABLE !

SERVICE

BEYOND

SERVICE

REPAIR

JJJJJJ

Phone / AOG 816.524.7777
avionics411.com

Millennium International

avionics news

Sales & Service

*

march

2015

55
http://www.avionics411.com
Avionics News March 2015

Table of Contents for the Digital Edition of Avionics News March 2015
