Special Discounts - a good method to grab undecided customers

Recently I was shopping for a resort to host my company's upcoming retreat. The specification was simple: somewhere beautiful, requires a short plane ride and all inclusive. The resort that I had in mind was Tanjung Rhu Resort in Langkawi. I started inquires about the prices as well as the flight tickets.

Within a space of 4 hours, I have not only committed to the Resort but also booked the flight tickets through MAS. This is not the normal speed for company type purchases. So why the difference?

Special Discounts. Both the resort and MAS suddenly offered a special deal to the company that is nearly 40% and 70% lower, respectively over the standard price. The catch is; the company must commit within 4 hours or the special rates will disappear.

In this case, although I knew what I wanted, it is still not a foregone conclusion that I will go to Tanjung Rhu. Cost matters considerably. Nevertheless, the "special discount" by both the resort and MAS was too good to resist.

On reflection, I realised the power of "special discounts". Although your margin drops considerably if it is offered, the positive angle to it is that you will get a big booking. Sometimes it is not the marginal profit that matters. Bottom-line profit and effective use of company assets should also be looked into.

In the case of the resort, they have sunk cost in terms of the rooms. If a big booking comes in, it makes sense to take up the booking as it ensures a good proportion of the rooms will be occupied. Keeping strictly to the standard rates reduce your potential to monetize your operating assets.

In the case of MAS, taking a big booking now ensures that a number of seat on their plane will be taken. Now, the other seats can be priced at standard rate without the need to offer any further concessions.

Net position - Revenue and profit gain!