How To Make Sure Your Sales Events Are Profitable

Sales events like Black Friday, Cyber Monday and Boxing Day can be a fantastic opportunity for small businesses to attract customers and increase revenue. However, without careful planning and strategy, these events can negatively impact your profit margins. Here’s a comprehensive guide to ensure your sales events are not only successful but also profitable.

1. Set Clear Profit Goals First

Begin by defining your profit goals for the event. Whether it’s to increase overall revenue, move some obsolete stock or attract new customers, having clear objectives will help you design promotions to contribute positively to your bottom line.

📰 The Simple Way to Set Profit Goals this blog will help you map out some more top line goals.

2. Know Your Break-Even Point

Calculate the break-even point for each product or service you plan to include in the event. By understanding your costs, you can set discounts not dipping below this point, ensuring each sale adds positively to your business.

For example, if you don’t have 20% profit on your regular pricing, offering a 20% discount is selling at a loss 😬

If you’re unsure about your trust costs, remember to factor in everything: packaging, shipping, the small treats or cards you include with orders, even welcome or thank you gifts you send new clients.

🧮 Grab our Pricing Calculator to plug in your costs, test different pricing scenarios, and see exactly what discount levels you can afford without compromising profit for your sales events.

3. Focus on High-Margin Items for Discounts

When deciding which products to discount, try prioritising those with higher profit margins. This strategy allows you to offer attractive promotions while safeguarding your hard earned profitability.

It can sometimes be best to avoid broad, business/storewide discounts, as not everything you do or sell has the same profit, so it can eat into your any profit quickly. This is why looking if it’s more viable to focus on high margin items, allowing you to maintain healthy profits, still delivering value to your customers.

4. Try Bundling Instead of Heavy Discounts

Consider creating bundles to combine complementary products or services. Bundling increases perceived value without heavily discounting individual items, protecting your profit margins while enticing customers.

This approach works well, because customers know and feel like they’re getting a great deal with added value, while you benefit from moving multiple items, or provide multiple services, in a single sale – all still at a profitable price point, without the need for heavy discounts.

Someone working on a laptop with calculator on the side and pot of pens.

5. Create Upsells and Cross-Sells to Increase Order Value

Increase the average order size by incorporating upsells and cross-sells during the checkout process. Suggest premium versions or related products to encourage customers to add more to their carts.

For example, in a service based business, if a customer books a standard consult, you might offer an upsell to a more in depth, premium consult package at a small discount, or suggest an add on service, like a follow up session, or personalised report. This helps maximise your sales, meeting more of their needs.

6. Keep Scarcity Real and Transparent

If this is something aligned with your businesses and services, you can use it to build trust and urgency, but ALWAYS keep it genuine. When items are truly limited in supply, or the sale runs for a specific period, communicate these factors clearly, to prompt decision making without drastic price cuts.

  • Limited Stock: If you only have a limited items available, let your customers know. For example ‘only ‘Limited Stock available’ or ’10 Spots only for this service’. Avoid suggesting limited items if it isn’t true – this breaks trust.
  • Time Sensitive Sales: Let customers know your sale is only for a specific time period, such as ’24 Hour Flash Sale’ or ‘Ends Sunday Night’. Clearly setting a deadline creates urgency, but make sure to stick to it, extending a sale weakens the impact and you appear inauthentic.
  • Exclusive or Seasonal offerings: If an item or service is seasonal, or exclusive, communicate this timeframe such as ‘Limited Holiday Collection’ or ‘Only Available to Waitlisters’. Again adding a sense of urgency, while staying true to what you offer.
  • Real Time Stock Indicators: For e-commerce, a live stock counter showing how many items are left (eg only 3 left in stock) allows customers to see in real time exactly how many are left. Creates urgency to buy, without exaggerating.

Keeping scarcity transparent, and honest helps customers make prompt buying decisions, while building trust in you, and your brand.

Pink heart shaped wallet with $20 notes and a pink clock.

7. Double-Check Discounts Before Going Live

Before you launch, take a moment to review your discount calculations one more time. You’ll be surprised by how many businesses feel confident about their pricing, only to find out post sale, profits didn’t quite align with expectations. A quick double check can save you from unpleasant surprises.

Ensure each discount level is sustainable and supports your profit margins. Making sure you have more profit margin in your original pricing, than your discount offered. And remembering storewide discounts might look appealing and easy on your side admin wise, but if your profit margins aren’t up for it, you could wind up losing money on every sale.

💸 If you want to dive deeper into pricing strategies, and common mistakes to avoid, check out one of our most popular podcast episodes Pricing For Profit (and mistakes to avoid).

8. Factor in Marketing and Fulfilment Costs

When calculating your profitability, don’t overlook the costs of marketing, and fulfilment (order processing, picking & packing, shipping, exchanges etc – as with sales there are often a higher number of exchanges). These expenses can add up quickly and significantly impact your bottom line. Additionally, remember to include ad spend in your calculations. A strong return on ad spend (ROAS) doesn’t guarantee your sale price is profitable; you need to account for all associated costs.

By considering every expense related to your event, you’ll gain a clearer understanding of its overall profitability, ensuring your promotional efforts truly contribute to your financial goals.

9. Limit Storewide Discounts

We’ve touched on this a couple of times, but here’s why I’ve listed this as its own step. Storewide discounts can severely affect your profit margins, often leaving you with little room to breathe. Instead of applying broad discounts across your entire inventory where they could each have different profits built in, focus on specific products or categories aligned with your sales strategy. Alternatively, consider implementing discounts requiring a minimum purchase amount, encouraging customers to spend more while still protecting your profits.

By being strategic with your discounting approach, you can entice customers without jeopardising your financial stability. This way, you create a win-win scenario—customers genuinely know feel they’re getting a deal, and you maintain a healthier profit margin.

10. Save for Taxes

Income tax, GST, or your country’s applicable taxes on promotions can accumulate quickly. Set aside a portion of your event revenue for taxes to prevent cash flow issues down the line. Being proactive about tax obligations helps ensure smoother financial management.

🏦 To keep your savings on track, check out our simple guide on BAS Forecasting Without a Crystal Ball. It has practical tips to help you stay ahead of your tax obligations.

pink background with different money notes paperclipped to string

By setting clear profit goals, focusing on high-margin products, and implementing strategic upsells, you can create sales events that attract customers and lift your revenue without cutting into your profits. A thoughtfully planned sales event not only drives sales but also solidifies your business’s financial health, paving the way for future growth.

Remember, this is general advice, and what works for one business may not work for another. Avoid copying other businesses’ strategies; their needs are different from yours. Do your research, know your numbers, and if a sales event isn’t the right fit for you at this time, don’t feel pressured to follow the crowd. It’s all about working smarter, not harder!

Ready to take control of tracking your sales events and protect your profits? Our fave accounting tool for tracking your crucial numbers, while saving you both time and money, is Xero. If you’re looking to level up your financial management, grab a copy of our guide Xero Money Saver: 3 Mistakes Costing You Money. In this guide, we’ll show you how to make Xero work for you, helping to navigate your sales events with confidence and clarity.

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