At Vanagon.org I’ve decided against having promotions for Black Friday, Cyber Monday, or any other time during the holidays. In fact, I don’t discount any day of the year. Just about everyone knows that it’s common practice for businesses to run sales, especially around the holidays. “Lowest Prices of the Season” or “Black Friday Blowout,” you’ve seen them all…many retailers report an exceptionally large amount of sales during these promotional periods.

Before I explain why I’ve decided against this, let’s look at what promotions and discounts really are.

How discounts work

The idea behind a discount on the surface is pretty simple. Something that previously cost $100 is now on sale for $80. The consumer has saved $20 over what they would have paid. Promotions exist to create a perception that customers are saving money.

Why do companies charge different prices to different customers? It’s based on the idea that the customer that paid $80 would NOT have purchased if they had to pay $100. This is all based on the theory that a customer who thinks they are getting a deal is more likely to buy.

Cyber Monday

Cyber Monday is the largest day of sales all year for online retailers. This is driven in large part by retailers offering some of the steepest discounts of the year over the weekend. However, here at Vanagon.org, it’s just another day. Other online retailers can see a 15x surge in sales on Cyber Monday compared to the average of every other day of the year.

Using those figures, Vanagon.org leaves thousands of dollars in sales on the table. For a small business, that’s a substantial amount of money. This coming Monday, it could be well over $3,000 in revenue that I’m missing out on because I refuse to discount.

So...why don’t I discount at Vanagon.org?

Fairness

Vanagon.org was started for two reasons...first, as a new Vanagon owner I had a tough time locating how-to articles and information, so I decided to start documenting my own repairs. Second, I saw an opportunity to provide select quality products for prices that couldn’t be beat. This savings could be passed on to fellow Vanagon owners.

From this experience, a decision was made to offer fair and transparent pricing. I decided that the best pricing strategy was actually rather simple:

When customers pay different prices for the same product, one group of people are subsidizing the discounts for another. Seem fair to you?

In some industries, the idea of a discount is fair. Take apparel for instance. Customers pay a premium to have trendy styles before everyone else. Out of season clothes and styles legitimately get discounted so the store can make the best of old inventory.

At Vanagon.org I don’t face those same challenges. I sell the same products every day of the year. I am never “stuck” with inventory that I need to move. If I were to offer discounts, it would be for the sole purpose of increasing sales. For the record, I’d love to increase sales, but that will never be worth trading my personal values for.

Empathy

I will admit, some days this isn’t an easy decision to make. It goes against the conventional wisdom that you can drive incremental sales by charging the right price, to the right person, at the right time. However, this never sat well with me.

One of the key virtues I seek is empathy. When I put myself in the shoes of my customers, discounts didn’t feel right.

How would I feel if I bought a new tool, and then drove by the store a week later to see 30% off all products? How would I feel if I needed new fuel lines in October, but knew that if I waited until the end of November there would probably be a deal? How would I feel if a friend told me they bought a new bike for $150, but when I went to the store I had to pay $180?

In thinking about all of these scenarios, I realized there was a simple way to remove these concerns. I wouldn’t offer a discount to anyone. I would charge everyone the same, fair price, 365 days a year.

Hidden Costs

So what are the hidden costs of sales?

For starters, the idea of a 15x surge in revenue on a single day can be viewed through more than one lens. On one hand, you can drive a large amount of sales. But an increase in sales can cause problems and added expenses. How does a company scale the customer service and operation needs without hiring 15x more people for just one day?

Around October of every year, you can see signs of these challenges all around us. Brands are forced to hire “seasonal” or “temporary” workers for the surge in retail that occurs in the fourth quarter of the year. These individuals are often employed just for the season and aren’t trained as well as your permanent customer service team members.

There are other hidden expenses. Customers who buy based on referral, are less likely to return the product and more likely to tell their friends. When you attract new customers via discounting, there is a risk that they are less excited about the brand. They are more likely to return your product increasing your costs even further.

I see discounts as a manipulation, and would feel like I was tricking customers into buying something. I want customers to purchase from me whenever they are ready to buy. When a customer buys something from me, they are buying a product that will last for years to come. I want to earn their loyalty throughout the entire process, not just at the point of sale.

But maybe the most important reason to avoid discounts is for my own sanity. Before Vanagon.org, I used to handle the sales for a small tech company. Discount related customer contacts were always the least “fun” to handle. It can also get complicated when you try to explain to customers why they aren’t eligible for a certain promotion. You know what I’m talking about...like when new customers get a big discount for a new subscription, but loyal subscribers keep paying the same old price because they’ve been around for years. Doesn’t make sense, does it? If you’re going to offer a discount to new customers, surely your current, loyal customers should automatically get the same price, right? Sadly, that’s almost never how it works.

In the end, discounts may drive revenue, but they also increase your costs in hidden ways.

Strategy

It’s hard to tell what pricing strategy each company you interact with has adopted. It could be arbitrary. It could be based on what customers have been willing to pay historically.

At Vanagon.org I’ve adopted a pricing strategy of fairness. This means I charge enough money to cover my costs, pay myself fair compensation, and allow Vanagon.org to grow. I’ve actually put this fairness strategy to work multiple times in the company’s history.

A few months after I started selling the Instrument Cluster Foil Repair Kits, I had a pretty big debate with some close friends/family about raising the price. Demand was high, and at the time, the competition was charging just short of double what I was. Ultimately, I kept telling them:

I have raised prices exactly one time since the founding of Vanagon.org in 2014, and that was caused by an increase in shipping charges / exchange rates. This won’t last forever. Inflation alone will eventually cause a small bump in prices. But when I need to do it, I’ll be transparent as to why.

I also list non-deceptive prices. i.e., I do not use $34.99, $99.95, etc. All products are listed in whole dollar amounts. (One exception is for stickers. They are small-dollar products where 50 cents actually matters in determining a fair price. Even those I list at $4.50 not $4.49, etc.) Again, I don’t want to try and trick people into buying an item on a perceived discount. Not only do I already know I charge a fair price, but I also have better pricing than any other Vanagon vendor for the products I sell.

And lastly, as the business owner, it devalues my products.

If your business regularly runs sales, ask yourself, why would anyone ever pay full price for your product? Inadvertently you have established the real value of your product as the “on sale” price. People know a sale is coming, they will just wait for the next one. Also, people will dig up old social media links and ask for the same discount at any given time. Trust me, this happens. It came up time and again for me at my aforementioned tech sales job. The sales promotions we ran ultimately set the maximum price many people were willing to pay. If that’s not a bad business model I don’t know what is!

Offering the same price every day of the year is a really simple idea. So simple, you’d think more people would do it.

- Eric

EDITORIAL NOTE: This post was inspired by an article originally written by the mattress company Tuft & Needle. Unfortunately, they were bought out by Serta in 2018 and their article has since been deleted. (They never used to run sales. Sadly, one of the first major changes was to do just that. Suffice to say, the words from their post ring very hollow in hindsight.) I was able to track down a copy of it (just barely!) and produce my own, edited version. Parts of this post were heavily borrowed from their original article, but, I have made significant modifications as their business is drastically different from Vanagon.org. All opinions are my own.