Progressive discount table: 4 mistakes you shouldn't make

Are you using the progressive discount table properly? Know that using it timely could be the missing piece for your company to achieve incredible results. sales.

To achieve this, simply adopt a few best practices when developing this strategy. After all, it's a way to encourage customers to buy more products through a proportional price reduction.

To help you maximize your profits, we'll highlight four practices to avoid when creating a progressive pricing table. Read on!

1. Not defining the products correctly

The first step is to choose the products. This decision should be made before the other steps are completed, as each item has its own consumption characteristics.

In this context, there are those that are purchased on a large scale, while others are usually purchased only in units — as is the case with computers and cell phones, for example.

No plan Failure to do this step correctly could result in your company obtaining a negative result, as there are products that consumers tend to purchase even without discounts, while others require the adoption of this strategy to encourage purchases.

2. Not knowing how to calculate the margin

One mistake that can jeopardize the entire table's development is failing to calculate the profit margin—or calculating it incorrectly. This lack of caution can result in the cost exceeding the purchase price.

That said, we can define profit margin as the difference between the price paid per unit of the product and the cost to produce it. In this scenario, we mustn't lose sight of the fact that this concept unfolds into three indicators, which, when considered jointly by managers, allow for a more reliable profit margin definition. Here are the indicators:

• mark-up;
• gross margin;
• net margin.

Finally, it is important to highlight that, according to experts, the three indicators have limitations, but when used simultaneously, they offer more accurate information about the real gains obtained by your company.

3. Not correctly defining the quantities in the progressive discount table

Once we've decided which products will be included in the promotion and the profit margin, we need to consider the table's threshold quantities—the minimum and maximum points. This action must be guided, once again, by consumer behavior.

To this end, we can use software or cloud platforms which will contain, among other strategic information, the registration of each customerUsing this data, we will define the minimum and maximum quantity that consumers purchase of a given product — for example, 70 and 200 units of SI50 rebar, respectively.

4. Not segmenting discounts

Once we've defined the values that will be the table limits, we'll begin segmenting the discounts. Starting from the limit of 70 units steel rebar as a minimum consumption and 200 units as a maximum, we will segment discounts of 5% in the following ranges:

• up to 70 units, normal price;
• from 71 units to 120 units, 5% discount on the unit price;
• from 121 units to 170 units, 10% discount on the unit price;
• from 171 units to 200 units, 15% discount on the unit price;
• above 200 units, 20% discount on the unit price.

If you don't perform this price segmentation procedure, the consumer will tend to always buy the minimum amount, and this goes against your goals of reducing inventory, for example.

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