Connect with us

business

The difference between upselling and downselling

Published

on

downselling and upselling

Companies often look to sell more expensive goods. Those should bring more profit, right? Or is offering your customer lower priced products and services better for your bottom line? Truth is somewhere in between and a better way to build a customer base is considering both.

So what is the difference between upselling and downselling and how can we use them for maximum business impact?

What is upselling?

Upselling is the marketing and sales practice of offering a more expensive product instead of the one they were considering.

For instance, when someone comes to buy a smartphone try to convince them to go with the version with extra memory, higher resolution screen and better camera. Or switch from private label to a premium brand, for a premium price of course.

Very often, customers will feel more comfortable with lower price points when starting their evaluation.

Once they are a bit further along their customer buying journey an have descided to buy a product to solve their problem, the consideration of alternatives starts. A more expensive version is part of customer phychology and only when the benefits outweigh the price difference will they be persuaded to buy the more expensive version.

What is downselling?

Downselling is the opposite of upselling. Instead of the more expensive product, you propose a cheaper alternative. This is often done when interest in the pricier version is lacking. But there can be other reasons as well. Older models or out of season products are often sold at lower rates to get rid of inventory.

Benefits of downselling

Down-selling can be a great tactic and even more important to company success and developing customers over time.

  • Adding entry-level products into your product range allows your brand to start developing brand awareness and brand loyalty in the audience segments that cant afford premium products at the moment, but will later grow into brand loyalists and advocates.
  • Lower priced items might (contrary to what you’d expect) have better profit margins and be easier to sell in volume, so end up being more profitable. It can greatly increase foot traffic or website traffic, and gives you an edge over competitors with similar products.
  • Another benefit of downselling is that it can create a sense of urgency as customers buy before prices go up when you make offers to your existing customers that are only available for a limited time or quantity. It will motivate them into purchasing again from your company because they feel more valued by the business.

Cross-selling

Next to both upselling and downselling is the related tactic of cross-selling. Cross-selling is another way to increase sales. Suggest to add a related product to a customer. The goal of cross-selling is to increase the value the customer gets from your store.

An example of cross selling is added warrantee. This also increases brand loyalty.

Online marketers are often confused about the difference between upsell and cross-sell

In online marketing, the term “upsell” is very often used, when it’s really describing “cross-sell”. The difference is this: Say you are selling someone ear buds to go along with their phone, that is cross-selling.

When the customer comes in for a cheap model phone and they end up buying a more expensive version, that is an upsell.

The earbuds are an addition, but not the same product. They are a different product category, actually. Now this is where the confusion starts, because if the more expensive version is a package with multiple products, it is a cross-sell – even if many will call that an “upsell”.

Good to know the difference, using the right definitions projects a professional image to business connoisseurs. The terms are so often misused though, better not to start a discussion about it.

Strategic use of upselling, downselling and cross-selling

So why the focus on downselling, up and cross-selling? Well there is one reason: It can be a true profit generator. Proper use of these tactics in a right sales-mix can lead to multiples in bottom-line profit.

All advanced marketing and business strategy considers the options for upsell, downsell and cross-sell as a part of their business growth strategy. It however might take a keen product marketing manager to fine tune the exact offering, range and methods to be optimal.

Recent Posts

Popular posts

wiifm whats in it for me wiifm whats in it for me
business2 months ago

What does WIIFM Mean (and Why is it Important?)

WIIFM is a term used in marketing and advertising to describe what the audience will get out of using or...

featured image: Cool Skills You Can Learn in Your Spare Time featured image: Cool Skills You Can Learn in Your Spare Time
Productivity2 months ago

25 Cool Skills to Learn and Level up Your Life

The best thing about life is that there are no limits to what you can learn. If you want to...

featured image: The 7 Best Invoicing Software for Freelancers featured image: The 7 Best Invoicing Software for Freelancers
Finance & Budgeting4 months ago

The 8 Best Invoicing Software for Freelancers

Invoicing software is a tool that helps freelancers create and send invoices to their clients, track payments, manage expenses, and...

featured image: 9 Best Employee Management Tools in 2024 featured image: 9 Best Employee Management Tools in 2024
Human Resources4 months ago

9 Best Employee Management Tools in 2024

Managing your employees requires more than just spreadsheets and human resources personnel. It demands precision, empathy, and efficiency—all made possible...

featured image: Best Gifts for Small Business Owners featured image: Best Gifts for Small Business Owners
business11 months ago

50+ Best Gifts for Small Business Owners

Running a business isn’t easy. All business owners are grateful for the help from their friends and family. If you...

Featured image: Use Amazon's 16 Leadership Principles for Success in Business Featured image: Use Amazon's 16 Leadership Principles for Success in Business
Leadership1 year ago

16 Amazon Leadership Principles for Success in Business

Amazon is one of the most successful companies in the world. They had a revenue of $574 billion in 2023....

featured image: Best Sales Books for Beginners to Help You Master the Art of Selling featured image: Best Sales Books for Beginners to Help You Master the Art of Selling
business1 year ago

11 Best Sales Books for Beginners: Master the Art of Selling

We’re reader-supported. When you buy through links on our site, we may earn a commission at no cost to you....

featured image: Powerful and Inspirational Quotes for Small Businesses featured image: Powerful and Inspirational Quotes for Small Businesses
business1 year ago

50 Powerful and Inspirational Quotes for Small Businesses

Running your own small business can be tough, but it’s also incredibly rewarding. There are so many challenges and obstacles...

Trending