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A recent MSNBC article says there aren t many shopaholics left due to the recession. Then it explores how retailers are responding to frugal consumers for the upcoming holiday season, which accounts for up to twenty percent of annual sales for many of them. Last year, holiday sales were down 3.4%. This year, even more Americans are dealing with job loss, fear of job loss, wage cuts, a drop in home prices and a rise in credit card interest rates. ___ ___ So what will consumers do? What s a retailer to do? Working twice as hard but not making anymore Let s start with retailers. Dropping prices to push out inventory has become the norm since last year. Offering extreme discounts is a tactic many will use to try to get customers in their doors. Here s what that means: Let s say you have a product that costs you $10. You normally sell it for $20, leaving you with a $10 profit. You decide to cut your price by 25% to $15. So now you make $5 every time you sell a product. You have to sell twice as much of this item just to make the same amount of money! In this example, we used a product sale to keep it simple. However, many small businesses sell a service. So think about it this way: Carrying forward the numbers above if you cut your hourly rate by 25% you would have to work twice as much but you wouldn t make anymore. Is it worth it? Would you be better served pursuing another strategy? Consumers are more price-sensitive, but value is still king Now, let s look at those customers. Experts cited in the article say consumers will shop for good value on items they want and need. Note the term value , not price. Consumers are more price sensitive than ever. However, because they have been bombarded with super-low prices, they are beginning to think that those products are worthless. Furthermore, they will pass up an offer even if the price seems too good to be true if they think they just don t need the item. If you cut prices too much, you may kill your business by killing your customer with kindness! 3 strategies for a tight-belt economy: Divide your product or service offerings into three categories must have, need and want. In this economy, focus on the must haves. Which customers must have your must have product? Focus most of your efforts here. Is there a way to bundle a need with a must have or a want with a need ? Offer a special deal on the bundle rather than the individual product or service. You may find that you can sell more without having to work a lot harder. Think about your customer s bottom line. How can you add value to your product or service and boost your customer s bottom line at the same time? For example, is there some essential knowledge that you could impart to help your customer use your product or service to save money? If so, they ll be much more likely to buy even now. How are you compelling your customers to buy your products or services? Share that with us by leaving a comment, e-mailing us at bigginfo@biggsuccess.com or leaving a voice message at 888.455.BIGG (2444). We think you re too kind for checking in with us today. Thanks so much! ___ Get the tips and tools you need to be a BIGG success. Subscribe to the Bigg Success Weekly it s FREE! ___ There s a popular celebrity who says it took him 26 years to get one mile down the road. Please join us next time and we ll fill you in on his story of bigg success. Until then, here s to your bigg success! Subscribe to The Bigg Success Show in iTunes. Subscribe to the Bigg Success feed. Direct link to The Bigg Success Show audio file: http://media.libsyn.com/media/biggsuccess/00517-110609.mp3 Related posts The Trick to Keeping Customers 3 Reasons Entrepreneurs Fail (Image in today s post by xenxen)

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