“The best that an entrepreneur or a company can create is a perfect product that fully justifies the price with its value for the buyer.
The discount appears where demand needs to be stimulated and it is sensitive to this kind of stimulation. The greater the price elasticity of demand, the greater the effect of discounts.
In the real estate market, demand does not price elastic. Therefore, real estate discounts most often perform 3 functions:
▪️ Discount as advertising: a news occasion, designed to increase lead generation. The flaw - the discount reduces the value of the project in the eyes of the audience.
▪️ Discount as a stimulus: to encourage those who are already interested in the project but not ready to buy. Viz, the discount is a payment for the rejection of the sales department to communicate values as high as possible and minimize the risks in the eyes of the client.
▪️ Discount as an assortment corrector: correcting the imbalance in residue as a result of uneven sales. This is the way of correcting the consequences of ineffective price management.
WHEN ARE DISCOUNTS EFFICIENT?
The discount is justified when its financial effect is clear.
For example, in the case of sales to wholesale customers without additional marketing costs.
The discount provided to stimulate sales when there are cash gaps in the project is also quite logical, although it is the result of not very balanced management of the cash flow of the project.
Expanding the audience due to a significant discount often leads to increased sales, but the price of such an expansion reaches tens of percent.
WHAT IS THE ALTERNATIVE?
The best alternative to discounts is service.
Buying real estate is first and foremost building trust. Trust minimizes the risks that directly affect the readiness to pay one or another price. The more trust, the less haggling.
To "prevent discounts" should build 2 systemic processes: creating and communicating values and reducing risks. This applies to a wide range of functions: architects, marketers, sales managers, builders, and service managers.
One of the best methods of "anti-discount" is to set current prices and constantly adjust them depending on demand. "