Discounts: Why It Can Be Better To Receive Them Than Offer Them To Clients

The Massey Clark Fisher Team | 03/07/2012

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Insurance companies are in the business of analyzing and managing risks. The company that provides Florida commercial insurance coverage for your business may offer discounts that significantly reduce your insurance costs, and you may be sure that in setting insurance premiums an insurance company has taken account of the risk of insuring you.

Your accountant may well encourage you to take advantage of any discounts that may reduce your business costs, but might also give advice against offering discounted prices to your clients and customers unless you have carefully considered the implications. These are some of the matters you should consider:

Offering discounted prices can be worthwhile if it helps you to offload unwanted inventory items.

Discounts for cash payment or prompt payment can help to improve business cash flow.

Introductory discounts for new customers may generate sales but there is a risk that they will be unwilling to pay full price when discounting is removed.

Introductory discounts can cause your current customers to become resentful because new customers are being offered more favorable prices.

Discounting your prices can start an unwinnable discount war with your competitors.

Discounted prices for products or services can affect the image of your business, giving potential customers expectations of low quality or signaling that you lack confidence or experience.

Regularly discounting as an apology for poor customer service may lead to some clients habitually complaining in anticipation of receiving a discount.

It’s important to think through the pros and cons before you offer discounts for your products or services. However, to reduce the costs of your business operation, do find out about any Florida commercial insurance discounts that your insurer may offer.


Disclaimer: The above description provides a brief overview of the terms and phrases used within the insurance industry. These definitions are not applicable in all states or for all insurance and financial products. This is not an insurance contract. Other terms, conditions and exclusions apply. Please read your official policy for full details about coverages. These definitions do not alter or modify the terms of any insurance contract. If there is any conflict between these definitions and the provisions of the applicable insurance policy, the terms of the policy control.

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