A national retailer has marked their candles, which are normally $24.50, down to $9.50 and EVERYONE HAS LOST THEIR DARN MINDS as if it were at an infamous big box store on Black Friday. (Okay…not that bad, but there is a line out the door in my area. And yup, I got my candles too.)

Then it hit me. Not everyone knows why companies have sales…especially like this one. So, let me drop some knowledge:

1. They need to get rid of product. (This comes in the form of clearance and semi-annual sales.) It actually costs to store products. So they’ll rather lose money per product than pay the storage fee.
2. They are distracting from the competition. If a competitor is opening close by or is having a sale, stores use different tactics to drive you to stores hoping that you’d neglect the competition. And even if you still go to the competition, they still get a bit of the money.
3. Customers buy more than what’s on sale. They know that customers come for candles and leave with candles, lotion, air fresheners, body wash, lip balm, and a gift for bae.
4. They can afford the sale. The margin/markup is so high on the regular price that they can afford to place the products for a lower price. (If you know Bath & Body Works, this is literally how they roll.)

How this applies to small business owners:

Sales are good. I’m a fan…especially when it comes to business to consumer products. However, consider your profit margin.

-Are you making enough money to have a sale?
-What’s your sale structure? Weekly? Monthly? Holidays only? Other?
-Do you want to be known for sales or do you want people to purchase regular price? (FYI…there is nothing wrong with being known for sales. Just operate your business accordingly and don’t get upset when people don’t purchase at regular price.)