While discounts can effectively draw in people and increase sales, retailers should tread carefully. Multiple discounts applied to a single purchase can rapidly shrink profit margins to unsustainable levels. Looking up bargain shopping sites, you can read how double discounts dramatically impact a business's bottom line in dramatic examples. Let's explore double discounts and how you can prevent them using your point of sale (POS) system.
What Are Double Discounts?
Double discounts occur when a customer receives two discounts on the same purchase. For example:
- A product is on sale for 20% off
- An additional 10% drops off thanks to the customer's loyalty status.
While this added discount is a significant saving for them, it can destroy your profitability if not carefully managed.
The Impact of Double Discounts
To illustrate the effect of double discounts, let's look at this simple example:
In this scenario, you lose $28 on a $100 item. Imagine this happening across multiple products and customers - it adds up quickly!
How to Prevent Double Discounting
Fortunately, your modern POS system offers features to help prevent double discounting. Here's how you can set it up:
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To avoid this happening, please do the following.
Go to system maintenance, which is marked with the red arrow.
Then find this option "prevent discounting of sale items," marked with the red arrow here.
Set this to yes, as I have here. This will stop the double discount.
Benefits of Preventing Double Discounts
By implementing this simple change, you'll:
- Protect Your Profit Margins: Ensure you're not giving away more than intended on each sale.
- Simplify Pricing: Customers and staff will better understand the final price.
My Personal Experience
I went to a bargain shopping site, where a guy explained how to get another discount on top of the existing discount for an item. I followed instructions and got a $140 item reduced to $100 for about $70.
Additional discount management tips
While preventing double discounts is crucial, here are some other strategies to consider:
- Train Your Staff: Ensure all employees understand your discount policies.
- Clear Signage: Display your discount rules clearly to avoid customer confusion.
- Regular Audits: Periodically review your sales data to catch any discounting issues. See how you can stop many of these automatically in our POS Software here.
Conclusion
Preventing double discounts is a simple yet effective way to protect your profits, so leverage our POS system's features and establish transparent discount policies to ensure promotions boost your business profitability.
