Why Chasing Volume Isn’t Always the Answer: The Hidden Cost of Price Wars and Incentives

In the race to win customers, it’s tempting to slash prices or offer big incentives to your sales team to boost volume quickly. But what if I told you that this strategy could actually be costing you more than it’s making? Many small to medium-sized businesses fall into the trap of chasing volume at the expense of profit — and it has some serious consequences.

Here’s what’s really happening when you chase volume through price cuts and incentives:

1. Margin Erosion Lowering prices to win market share might increase sales, but it often means shrinking your profit margin. You end up selling more, but making less on each sale. The math doesn’t always work in your favor.

2. Incentives That Backfire Offering financial incentives to your sales team to push volume can motivate behavior, but if those sales come at low prices or to less profitable customers, you’re paying twice. Once for the incentive and again through lost profit.

3. Quality vs. Quantity Focusing on volume can attract customers who aren’t the right fit for your business or who don’t return. This reduces repeat business, damages your brand, and increases costs related to customer acquisition.

4. Long-Term Impact on Customer Loyalty Customers attracted primarily by price often switch to the next cheapest option. This makes your business vulnerable to competitors and can lead to a constant, exhausting battle on pricing.

So, what should you do instead?

Focus on Value, Not Just Price Build your pricing and sales strategies around the value you provide, not just the sticker price. Educate your customers on why your product or service is worth paying for, and reward your sales team for profitable deals, not just volume.

Target the Right Customers Look for customers who fit your ideal profile and those who appreciate your value and are more likely to become repeat buyers.

Measure Profitability by Customer and Product Use your data to identify which customers and products are truly profitable, and focus your efforts there.

Chasing volume through price cuts and incentives might feel like a quick fix, but it can undermine your business’s profitability and sustainability. Shift your focus to creating and communicating value, and watch your profits and your loyal customer base grow.