To Discount or Not to Discount? That is Our Question by Jeff Cinciripino

March 2026 Table of Contents
category: Retailing (5 min read)

It’s as Old as Retailing – But Does it Work?

byJeff Cinciripino, JeffCinciripino.com, Former Owner of Scuba Shack, Rocky Hill, CT

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You are most likely familiar with Hamlet’s famous soliloquy; To be, or not to be, that is the question. To borrow from Shakespeare, as dive retailers, we may rephrase that as, To discount or not to discount, that is our question. How we answer that question may have long-term ramifications for the value and profitability of the dive shop.

Who doesn’t like to get a discount? We are constantly bombarded every day through our television commercials, social media feeds, newspapers, and magazines with offers of steep discounts, enticing us to buy. There is even one local TV commercial that tells us to ask for ten percent, Charlie. Does everyone get ten percent? Are you going to offer everyone ten percent? Probably not, but have you really thought through your strategy if you do plan to provide reduced prices?

Dive centers are predominantly small businesses that have specific challenges that larger companies don’t face. Big companies may have greater purchasing power, a much larger customer base, access to cash, and the ability to withstand economic downturns. These bigger businesses have the reserves to offer steep discounts, in some cases up to 50% off, to address specific business issues they face, like excess inventory or new customer acquisition. We must remember that every dollar discounted is an impact on your top-line sales and, for small businesses, most likely an even more dramatic effect on the bottom line.

Let’s explore a couple of reasons why a business might want to offer discounts. One of the obvious discounting options is holiday sales. Whether it be Black Friday, Small Business Saturday, Presidents Day, or Jacques Cousteau’s birthday, advertising discounts is something to entice shoppers. However, is everything going to be discounted, or will there be targeted items? If the holiday discounts are going to be offered, some careful planning should be taken to achieve the objective, whether it be acquiring new customers, moving excess inventory, or getting people into the store.

Volume discounts are also an option. If the individual spends a certain dollar amount, a discount may be offered. Volume discounts can be tricky for a small business because the volume from a single customer may not be significant when you factor in the top and bottom line. For example, I happened upon a home shopping network that was offering a product at roughly 40% off. Great deal, right? But here is the difference: they sold over 20,000 units of the product, resulting in $3 million top-line sales. Now, if the cost of that product to them was $125, their net profit becomes $500,000, and that was in less than 24 hours. Now let’s contrast that against the strategy for offering the volume discount when a customer spends $2,000. If the margin on that sale is 40% and the offer is a 10% discount, the business has reduced its cash flow by $200. Again, every discount that a small business offers has a much larger impact on the operation.

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In talking with several different small businesses, their policy is not to discount their products. Their alternative is to offer added value. Perhaps it is a free consultation that utilizes staff already factored into the cost structure. Sometimes they may include a smaller item at no cost. This might be considered a discount, but it can have a very different outcome. Going back to our example of the customer who spent $2000 for a regulator and buoyancy compensator. By offering a free regulator bag that retails for $65 and costs us $35, we’ve now limited our cashflow hit to $35 plus the customer now sees the impact of doing business with the dive shop every time they open that “free” regulator bag. The 10% discount, however, fades in memory.

In my January 2025 article, Watching Your Wallet – Managing Expense and Improving Cash Flow, I offer up some observations on specific areas to look at, including shipping, bank fees, processing fees, and interest rates. Discounting should be another area to examine. Take a look at your previous year’s sales and determine how discounts impacted your top line, and recognize that this would absolutely flow to your bottom line. Then think about what you could have done with that extra cash flow.

To recap, there are many reasons that a business looks to discount its products and services. Perhaps they are losing market share and need to re-engage with customers, or perhaps they are looking to grow their topline sales. Sometimes the reason may be to build loyalty with their clients. All are valid reasons. However, here are some aspects to consider when looking to offer any reduced pricing.

Can I discount the product? (Check your dealer agreements)
Will reducing my price diminish my brand? (Are you in a race for the bottom)
Will this really increase loyalty? (Bargain hunters won’t stay around)

When answering our question – To discount or not to discount – each business needs to determine its own strategy with careful consideration, forethought, and planning.

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