When Demand Slows, Drive Revenue Any Way You Can

A slowing economy can mean slowing sales despite the quality of a business’ products or services. When this happens, it is crucial to take steps to survive the downturn and ensure you will still be a going concern when the next up cycle comes.

Your business’ fixed costs like rent, utilities, and insurance are just that – fixed. While you should always be on the lookout for opportunities to reduce them over the long term, changing them on the fly in an economic downturn can be hard. And your variable costs can be hard to lower quickly as well. No matter how diligent you are at keeping these costs down, there is always a minimum revenue you must attain just to break even.

So when times are tough, you must focus on driving revenue any way you can, even if it means lowering profits below what you “would like to earn” or what your perception of your product’s value is. Your main goal in tough times must be to drive enough sales to cover your costs.

These are stressful times for any business owner or manager, but it is possible to change tack, make it through the tough times, and – if you do it right – even build your customer base in a way that primes you for success in the next growth cycle.


Variable pricing is a good strategy in both good times and bad. When demand is high you want to be able to charge higher prices for profits to support growth. But variable pricing particularly shines in a down economy when your entire business could be at stake if you can’t keep revenues high enough to generate a positive net income. 

By strategically lowering your prices during a down cycle, you may be able to drive sales and revenue in a way that keeps the lights on and broadens both your customer base and product base for when things get better.


When you adjust prices based on demand, it is better to do so via discounts rather than by simply lowering prices. There are several reasons for this:

  • Everybody likes a deal, so customers who saw a product’s “good economy” price as reasonable are more likely to jump at the chance to get it cheaper. 

  • Current customers can be kept. One of the risks in a down economy is that current customers face their own financial issues and might not be able to afford your product anymore. By offering them discounts, you give them the opportunity to stay with you and rely on your products rather than someone else’s. Plus, you engender goodwill with those customers while keeping the original price they were already willing to pay at the forefront of their mind.

  • Current customers’ purchases can be increased. When you offer discounts to current customers, it also may give them an opportunity to buy more of your products, plus it may allow them to try some of your products they had previously considered too expensive. You can, and should, even encourage this by “bundling” products at discounted prices to encourage them to try new ones. More sales equals more revenue, and if your customers find value in these new products, they will be more likely to keep using them when the economy improves and you revert to non-discounted prices.

  • You can attract new buyers who may become long-term customers. Discounts offer new customers a chance to buy your products when they might not otherwise have done so. These new sales again drive revenue to cover your minimum costs, and – if you prove your products’ quality and value – some of these customers are likely to become long-term customers when the discounts go away.


If offering significant discounts is not your normal pricing strategy, you may need to adjust your marketing plan to target different groups, as well as just generally look for ways to reduce your marketing budget for a while. As noted above, your temporary marketing goals are likely to be selling discounted and bundled products to current customers, as well as telling potential new customers about current discounts and the value they represent. You will also want to emphasize the quality of your products and support them with outstanding customer service, so that when the time comes to roll back the discounts, your current and expanded customer base will stick with you at higher prices.


To maximize the effectiveness of price discounting in a slow economy, you need to have a clear, accurate picture of your costs for every product and project. Fixed costs and cost of goods sold determine the minimum revenue you need to produce in order to keep your business going during a rough patch.  Your bookkeeping and chart of accounts should be organized in such a way that these costs can be easily parsed and analyzed, so that you can strategize and balance discounts for specific products within the big picture. Depending on demand, individual products and services can allow different levels of discounting to keep profits on each as high as possible rather than relying on blanket discounts like a “30% off everything” coupon. You need to be able to understand the various aspects of each of your products to allow you to discount them accurately and bundle them effectively.


In a down economy, nothing is more important than ensuring your business remains a going concern until the next up cycle comes. First, make sure you have a highly accurate picture of your cost inputs for all of your individual products, and then consider targeted discounting to drive sales and revenues to keep enough cash coming in. By doing so you can maintain your current customer base and even increase it, and if you focus on providing quality and value, there’s a good chance this expanded customer base will stick with you when the economy improves and you are able to roll back the discounts.