7 Expert Alternatives to Price Cuts to Recession-Proof Your Business


Misguided pricing strategies during recessions result in catastrophic profitability loss and negatively impact customer relationships. Unfortunately, these outcomes can continue having consequences even when the economy turns around, so avoiding blunders is essential.

When your profits are dwindling, it’s tempting to slash prices and do whatever you can to make the sale. However, this is a short-term strategy that can negatively impact the long-term health of your business.

What can you do instead? Here are 7 alternatives to price cuts that maintain your brand image and profitability.

Strategy 1: Focus on Your Competitive Advantage

During recessions, focus more of your pricing strategy on competitive advantage. Determining what sets you apart and selling based on that will help you optimize for the ideal customer and maintain your margins.

There are three components to competitive advantages:

  1. Value proposition: legitimate value to attract customers
  2. Target market: an ideal customer who wants the value you add
  3. Competitors: an understanding of your competitors and what their value adds are

Thus, there are three main types of competitive advantages. These include:

  1. Differentiation: offering unique goods or services. Requires constant research and development. 
  2. Cost leadership: becoming the lowest cost manufacturer in your space (think Walmart). Average quality, larger-volume sales.
  3. Focus: understanding niche needs and developing products for them.
    1. Cost focus: lower-cost items for a niche market
    2. Differentiation focus: specific value-add items for a niche market

Use this info as a springboard for understanding your competitive advantage and brandishing it as a way to maintain customer loyalty and attract new business.

Strategy 2: Reward Loyal Customers

Losing customers raises costs, requiring you to work harder to find a replacement. Do your best to prevent attrition by further rewarding loyal customers. 

For B2C, some loyalty strategies include:

  • Targeted promotions
  • Rewards bonuses for certain spending amounts
  • Gamified points systems
  • Free samples
  • Punch cards
  • Referral rewards (referred customers offer 16% higher lifetime value)

For B2B, some loyalty strategies include:

  • Discounted subscription fees
  • Volume discounts
  • Free services (storage, delivery, setup)
  • Free product upgrades
  • Gift cards
  • Educational training on your product
  • Conferences
  • Early access

No matter your industry, focusing on rewarding your best customers is a win-win.

Strategy 3: Adjust Sales Goals to The Recession

The sales strategies of booming economies won’t work during recessions. Evaluate whatever your sales benchmarks are and consider shifting the focus to dollar contributions for market segments, products, and customers and away from sheer sales volume.

Profitability goals may mean forgoing market share ones, at least for now. A dominating market share doesn’t always equate to profitability – think Sears. This means you’ll want to shift emphasis away from market share in the hopes of it trickling down to profitability and instead go directly for profitability.

You may also want to overhaul your pricing strategy in its entirety. The best way to do this is to use dedicated pricing experts to optimize your pricing strategy; they’re the best in their field and will help you avoid the losses of misaligned prices.

Jennings Executive specializes in matching companies with expert pricing leaders. Learn more today!

Strategy 4: Use Pricing Segmentation

Pricing segmentation means dividing your offerings into upper-, middle-, and lower-tier categories (but name them something better than that!). 

Your highest-tier customers enjoy extra value with little discounting, and your lowest-tier customers get lesser value. 

This pricing segmentation means you can offset costs with higher-tier goods since operating costs remain similar across levels.

You may also segment costs based on location or purchase quantity. Whatever metric you choose, ensure the segmentation doesn’t negatively impact your brand. 

Strategy 5: Address Revenue Leaks

Recessions mean tightening your belts and addressing sloppy revenue losses. Some ideas include:

  • Recovering all costs associated with delivery, services, or other processes (consider minimum order quantities)
  • Minimizing the time between orders and receipt of payment
  • Preventing senseless negotiations (i.e., base any lower-negotiated-prices on objective metrics such as delivery or financing)

You can also take more tangible approaches to address revenue loss. This can mean selling off or eliminating office space, re-evaluating vendors for the best prices, automating where possible, and hiring freelancers instead of full-time employees.

Strategy 6: Protect Luxury Items

The more value your company has as a brand, the more insulated it will be from recessions. Attaining brand value can be done in a few ways, and it often includes selling luxury items. 

Importantly, avoid slashing luxury goods prices. Part of what makes these items luxurious is their prices, which maintain their expensive image.

Instead, offer one-time discounts and push referral rewards. Give customers every reason to continue buying these products and spread the word to their friends. The more sales volume you can achieve at the premium level, the more recession-proof you’ll be. 

Strategy 7: Shift Negotiations Away From Price 

Negotiating with customers is part of business, including during recessions. Instead of basing negotiations on price, shift the discussion elsewhere. 

You can instead base negotiations on volume, bundles, and payment plans. Inform your sales reps of this, and offer them practical concessions your business is willing to give.

Pricing Experts Are Essential

Especially during uncertain economic times where the cost of a poor pricing strategy can be business-ending, it’s in your best interest to hire pricing strategists. These experts have extensive experience optimizing pricing to maintain margins and will help you be as recession-proof as possible.

Since pricing is a relatively new field, finding seasoned experts is much more challenging. Jennings Executive specializes in recruiting pricing leaders and has a vast network of candidates for your consideration. Contact us today!

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