“Which of you wishing to construct a tower does not first sit down and calculate the cost to see if there is enough for its completion?” (Luke 14:28).
In the next few weeks, our inboxes and social media feeds will be filled with Black Friday, Christmas, and end-of-year sales. If you own a business, you may already be planning your own promotion. Before you choose a discount or send that sales email, there’s one question I want you to ask: Will this sale actually make me money?
Another question is whether the sale will help you build lasting customer relationships. Will it introduce your business to people who may return at your regular prices? Or will it mostly attract customers who only shop when you offer a deep discount? A sale can serve a purpose 一 whether that’s introducing new customers to your products or clearing older inventory 一 but you need to understand what it will cost and what you hope to gain.
As a bookkeeper, I want business owners to understand that sales and profit are two different things. A busy weekend, a stack of orders, and a higher sales total can feel exciting. However, once you account for inventory, shipping, advertising, and other expenses, you may keep much less than you expected.
The Math Behind the Discount
Let’s say you sell a product for $50, and it costs you $30 to purchase or make it. You have $20 left to cover your other business expenses and, eventually, provide a profit.
For Black Friday, you offer a 20% discount. Your customer now pays $40, but your product still costs you $30. That leaves just $10. Your customer received 20% off, but the amount you have left was cut in half. That means you will need to sell twice as many items to have the same amount left before other expenses. If you pay for ads, offer free shipping, or need extra help packing orders, you may need to sell even more.
That doesn’t mean you should never run a sale. It means you need to understand the numbers before deciding whether a sale makes sense.
Sit Down and Count the Cost
I love that Jesus says to sit down. That verse really gives us something to consider in our businesses: taking time to understand a commitment before making it.
Before you hit send on your sale email, sit down with a cup of coffee and look at the numbers. Consider all the costs and time involved in getting the product or service into your customer’s hands. What does each item really cost you? Include materials or inventory, packaging, any shipping you cover, payment processing fees, and the cost of advertising. Consider your time, too. A promotion that leaves you overwhelmed and working late each night in order to fill all the orders isn’t going to be fruitful in the long run.
Next, decide how much needs to remain from each sale to support your business and pay yourself. Then use that number to help you choose a discount you can afford. If a deep discount doesn’t work, consider a small gift with purchase or a bundle — but calculate those costs, too. You can also show appreciation through a handwritten thank-you note or thoughtful customer service.
Think About What Happens After November
A holiday promotion can introduce new customers to your business; but a first purchase doesn’t guarantee a second one. Consider whether your offer is likely to attract people who value your products and will return at your regular prices. Some customers will only shop during a sale. Others may discover your business through a discount and become loyal customers. The goal is to be intentional about whom you want to reach and how you will continue serving them.
You might include helpful product information with each order, invite customers to join your email list, or follow up with ideas for using and caring for their purchases.
Good Stewardship Includes Your Business
As Catholic women in business, we have an opportunity to practice stewardship through the decisions we make every day. That includes how we use our money, our time, and the gifts God has given us. Before following another business’s promotion, pause. Review your costs. Consider your capacity. Pray about the pressure you may feel to keep up and whether the offer supports the business you are trying to build.
A successful sale should leave you with more than a busy weekend. It should help sustain the work you have been called to do.
Beth Anne Kaczmarczyk is a cradle Catholic who is passionate in helping others in her community with her husband through the Knights of Columbus. She is a QuickBooks Online ProAdvisor and runs her own Bookkeeping firm. She is passionate about helping small business owners have less stress and grow their businesses. You can connect with her on Instagram, or join her monthly newsletter to receive a Monthly Bookkeeping Checklist!