October 2014 Q&A — 01 October 2014


TO DISCOUNT OR NOT TO DISCOUNT?

Q. Do you offer discounts, and, if so, to whom, how much and what results have you seen?

 

A.G. Paul Owner/Operator The Sound of Freedom U.S.A. Ozark, Mo.

A.G. Paul, The Sound of Freedom USA, Ozark, Missouri

A: We are a 16-lane indoor gun range with a 2,300-square-foot retail store where we rent and sell firearms and have a large selection of accessories for the shooting customer. We also teach conceal carry and beginner pistol classes in our state-of-the-art classroom. We are a membership-driven business with various membership choices available for our customers. We are open seven days a week and belong to three local Chambers of Commerce.

We do offer discounts, but discounting can be a tricky road to travel. With profit margins so thin on many of the items that we sell—items that our customers expect to see in a gun store—we are challenged to find discounts that we can pass on to our customers.

So, choices of where to give a discount and how much to discount are limited. Will it generate enough in added sales to cover the lower margin? In an economics class I took in college, I was told you can raise your price 10 percent, lose 20 percent in sales and, everything else being equal, your profit margin would be the same. The professor didn’t say that if you lower your price 10 percent, whether you would you have to have a 20 percent increase in sales to stay even. I’m sure it would be more than 20 percent, however, to break even with that scenario.

One marketing idea that we did put into practice prior to our grand opening and during the construction of our building was offering a discount on our memberships for those who joined prior to the opening of the Sound of Freedom. We began pre-selling memberships the day we broke ground and held the money in a separate escrow account, so as not to commingle the funds with the construction dollars. This was approximately seven months of selling that we did through our blog and attending gun shows. In return for pre-joining, those charter members were guaranteed that their annual memberships were never going to increase in price. In my opinion, it was a success. We sold nearly 200 memberships prior to opening. It reinforced our belief that an indoor gun range of our caliber was needed in this area and that people believed in our business model.

All memberships receive discounts on ammunition, targets and gun rentals. Members, for whom lane rentals are free, get an added perk in that they can bring in one guest per visit for half- price lane fees. This encourages new shooters to try out our range, while taking no cash out of our pocket. Membership choices are individual, couples, law enforcement, family and corporate.

Another discount structure that has been successful for the gun range is offering CCW and Beginner Pistol classes on the Internet. Using such half-price deal sites such as Groupon, Living Social and our local TV stations in 2013, we attracted more than 2,500 people who entered our business, took a class and shot their qualifying rounds in our range. It has been amazing to see the numbers flow through our doors, with many of them joining or purchasing product. Many also have come back for further instruction and referred us to their family and friends. Discounting a class “hurts” less than selling a product for a discount and then having to replace the product in inventory. Any specials that we offer we will also post on our Facebook page.

We try to keep our prices in line with our local competition. We would rather sell an item at a discount than have the customer leave the store without a purchase and with a bad taste in their mouth because we were too expensive. This can do tremendous harm from a public relations perspective.

Bottom Line: Most customers expect discounts on certain products, such as guns. Discounts can be a business-generating tool that will create repeat customers!

Good Luck with Discounts. Once you start, it’s hard to stop the train!

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