Discounting: is it easier to sell a Tesla than a T-shirt at full price?

A letter that Elon Musk, founder of Tesla, wrote to his sales staff chastising them for unauthorised discounting of his cars is making quite a stir online. Here it is in full:

Retail leaders may find the management articles on Musk’s clarity and courage somewhat irritating. In fashion, many UK high street brands are actively trying to turn back the discounting tide in the run up to Christmas (Anthony Thompson at Fat Face for example), but it’s proving hard to re-educate a generation of customers who’ve grown accustomed to “bargains”.

Intellectually, we all know that sticking to our guns on price isn’t profiteering (assuming customers are not purchasing under duress and you didn’t start exploitatively expensive to begin with!). And Musk is surely right that consistency on pricing is a moral imperative (“If you can’t explain to a customer who paid full price why another customer didn’t without being embarrassed, then it is not right.”).

However, with mortgages and pension funds riding on your business’s success, there’s no shame in feeling nervous about losing custom this winter to desperate, price-slashing competitors. The pressure is particularly acute if you’re selling a product that can be easily bought elsewhere (such as food, many consumer goods, 3rd party branded apparel etc).

Tesla, of course, is not subject to the same competitive pressure as the aforementioned retailers. If you want a discounted electric car you’ll have to buy a Nissan Leaf, friend. But that doesn’t mean under-pressure retail leaders can merely shrug off Musk’s example. There are things you can do to reassert some pricing power in your market.

At Yapster, we’re seeing customers beginning to make greater efforts to communicate the premium value of products & brands to front line staff. Colleagues usually feel a sense of pride when they realise how much care and thought has gone into supply chain and product by the time merchandise arrives in store. Customers need to understand that high-quality apparel, contrary to popular belief, doesn’t in fact cost pennies to produce and ship. The best people to deliver this message are in-store staff, but they must be inspired and empowered to carry it.

If you can persuade colleagues to tell your value story in a compelling way and customers buy into that narrative, it is essential that you do not undermine both by prematurely running flash sales. We can’t help you hold your nerve on pricing this Christmas, but if you’re searching for a better way to share success stories and brand values with frontline colleagues please do visit or drop me a line.

Yapster Admin