If you find it hard to draw customer traffic, dispose of products, or even increase your customer email list, employing some discount pricing strategies could be your last resort.
According to RetailMeNot study, 80% of the customers would not hesitate to try a product or service once it is marked down or coupled with freebies.
In other words, if you apply some discount pricing strategies, your products will be sold out in no time.
Employing discount pricing strategies is also a way to increase your ‘repeat customer’s list.’
Keep in mind that once you get tons of repeat customers, this will make your business invulnerable. In fact, 40% of the thriving chance of an e-commerce store solely relies upon repeat customers.
Indeed, applying discount pricing strategies in your business is an intelligent move. The good thing is that there are lots of discount pricing strategies that you can employ to boost your sales.
Do you want to know some of the effective discount pricing strategies? If yes, continue reading.
Top 7 Insanely EFFECTIVE Discount Pricing Strategies 2019
- Seasonal Discounts. If you want to capitalize on seasonal upbeats of people, you might find seasonal discounts as interesting. From the name itself, seasonal discounts pertain to the marked down and other sales promotions that are season- oriented. In other words, you will provide discounts within a specific period only. For example, if you want to offer discounts to grocery items, it is best if you’ll do it during the Christmas season. You know that people will buy groceries in bulk when Christmas is approaching since this is also the season where companies give bonuses to their employees.
- Promotional Discounts. One of the effective discount pricing strategies that meant to build trust and loyalty among customers is the promotional discount. Basically, a promotional discount is about cutting a huge margin of the original price of an item. As to what percentage you’ll provide a discount to your items, there are some factors that you need to consider. First and foremost is the type of product. If you have perishable items that will expire in the next three months, you must prioritize these products. You need to offer an enticing discount for these items so that you’ll be able to dispose of them before their respective expiration dates. Another consideration why you must provide a discount is the number of stocks. Don’t let a particular item pile up like another Taipei 101 in your warehouse. Instead, subject hard-to-sell items with great discounts. You’ll just be amazed by how people would run and get up to the last available item once you provide them with jaw-dropping price cuts!
- Volume Discounts. If you are eyeing for a big-time increase in sales, this discounting strategy is best for you. Volume discount is about providing marked down to customers who purchase items in bulk. In other words, you will establish a threshold for customers to qualify for this discounting strategy. Providing volume discounts is one of the discounting strategies applied by wholesalers around the world. These companies usually give a price cut once you buy at least three pieces of a particular item. This way, you can definitely offset the discount that you provide with the number of sales that you’ll generate daily.
- Buy One Get One (BOGO) Sales. According to a study, people tend to choose BOGO rather than price cut marketing strategy. Hence, this is another discounting strategy that you must try this year. BOGO is just about giving an additional and the same item out of a single purchase. This will surely entice the buying public since they will perceive that they will get two items for the price of one.
- Exceptional Discounts. Some companies want to provide ‘insane’ discounts to their clients- and this precisely what exceptional discounts are all about. You will think of ‘unbelievable’ discounts or freebies to attract customers. This could be a 100 percent discount on the next purchase. Or maybe you want to give some tickets to all your valued customers for a free tour in Hong Kong Disney Land. While it is true that this discounting strategy is a bit bold and risky, you’ll find out that the appreciation coming from your valued customers is all that really matters. So, if you want to build a lasting relationship with your customers, you must provide them with exceptional discounts from time to time.
- Loyalty Discounts. You must keep a strong relationship with your loyal customers since they are the blood life of your business. Loyal customers do not only assure a steady flow of profit, but these people are also instrumental in building your good image to the public. Your loyal customers will tell other people about their positive experiences in using your products or availing your services. And eventually, this will result in a higher return of investment. Indeed, it is the best decision to provide loyalty discounts to your loyal customers. You can do this by letting them sign a loyalty card (of course, some criteria will set qualifications if indeed a person is loyal to your products or services). The card will serve as their passport to avail loyalty discounts.
- Membership Discounts. This discounting strategy is very similar to providing a loyalty discount. You will also let your customers fill out a membership card that they will use for rebates and other perks. Upon purchasing items, they will earn points that are convertible to cash. In other words, all of the members of your valued customers’ club will enjoy huge price discounts as they keep on purchasing items from your store (whether onsite or e-commerce).
How Does Customer Psychology Impacts the Discount Pricing
Psychology is a science that studies the mind and behavior of people.
If you are running a business, you really need to master the psychology of your clients to keep you ahead of your competitors. You need to know how your customers think and how they find your business.
This is because it is human nature to dwindle the interest as time passes by. However, if you know the psychology of your customers, you will always find ways to keep your business interesting even after several decades.
The following are the reasons why the customer’s psychology directly affects the discount pricing of a particular business.
1. Aroused By Price Cuts. According to the price- value model developed by Monroe and Krishnan in 1985, discounts and freebies are sure ways to arouse customers.
Even if your brand is not that well-established or not that popular, as long as you offer a huge discount to the public, you will still route overwhelming customers.
You just have to make sure that you will indeed provide the customers with the discount that you laid on the price tag; otherwise, this will result in negative feedback.
If you want to give a 100 percent discount for the next purchase, then be it. After all, what you want is the optimum satisfaction of your valued customers.
2. Brand’s Mantra. You can also influence the psychology of your prospective customers by providing frequent price discount.
In fact, you can capitalize much on providing regular discounts and make it as your brand’s mantra. Brand’s mantra means the cause or calling that the public attributes to your brand or product.
3. ‘Charm Pricing’ is Enticing. If you want to generate more sales, you can employ the so-called ‘charming pricing’ strategy.
This discount strategy pertains to the positive impact of reducing the price of your items by one digit. Thus, instead of posting $3.00, mark that item as worth $2.99 instead.
Charm pricing will lure the people’s brain to purchase an item with a price that ends in ‘.99’. Your mind will even sense an urge of urgency to buy charm priced items since they are way cheaper than the other items with whole number unit price.
4. Product Intro. If you are just introducing an item, you will really find it hard to hook customers.
The people still don’t know the quality of your product and your brand is not yet established. Thus, to manipulate the psychology of prospective clients, you need to run a massive introduction price drop.
You can do this campaign in one quarter and assess if people already trust your products. Now, if you find out that still, the public did not patronize your products, maybe you need to apply other discounting strategies.
You must do all means to convince and change the perspective of people to favor your items. Remember that the trust and confidence of your clients are vital factors for your business to thrive in the market in the long run.
Advantages and Disadvantages of Discount Pricing 2020
Just like the other marketing routines, discount pricing has some advantages and disadvantages as well. For you to evaluate if it is worth taking the risk, check the following updated list of advantages and disadvantages of discount pricing this 2019.
- Hooks Repeat and New Customers. The main reason why you need to provide discount is to attract customers. Once you perceive that your sales are dwindling, you can always patch it by offering discounts and even freebies. Don’t think that you are on the losing end if you keep providing discounts because in the larger scale you will actually gain a higher ROI. Always remember that it is better to earn minute income than to get nothing at all.
- More Than one Target. If you own an e-commerce store, the web traffic means a lot for you. This actually dictates the probability of you getting clients and sealing a deal. That is why you need to run a couple of discount offerings to your items. You will surely gain enormous web traffic once you mark your items at meager prices. Also, the other brands or products that are posted on your website will also gain exposure. Thus, there is a chance that aside from the target item (in which you subjected for discount); you will also receive queries about the other listed products. And these queries will eventually be converted to actual sales.
- Boost Your Integrity. While it is true that discount strategies eye for a bigger ROI, it is also a way of boosting your integrity to the public. Once you keep on giving discounts, the public will perceive that you genuinely value them- that you understand that they cannot afford expensive items. So, if you are a genuine kind-hearted person, you must let the public feel it by providing frequent price markdowns.
- Low-quality Tag. One of the disadvantages of providing discounts to your products is that some people would think that this is a sign of being a low-class. In other words, the integrity of your brand will suffer if you keep on giving discounts. That is why you must provide discount sparingly to avoid any misconceptions and misbranding.
- Price Rival. If you own a small business, you must be very careful in providing discounts. Why? Because this will lead to a ‘price war.’ Price war means companies will keep on selling their items at a very low price. And if this happens, you are at the losing end. You cannot defeat giant companies with equipment that minimalize the production cost. In fact, the public can always find a cheaper alternative by just simply browsing the internet. So, if you want to stay in business, might as well spare yourself from giving frequent discounts to your clients.
- Kills Your Profit. If you fail to manage an overwhelming sale influx, you will inevitably suffer from a huge financial setback after providing discounts to your customers. This is because you can only offset the discounted price with the magnitude of people who will avail your products. If you are unsure if you can route the public’s attention, it is best if you just maintain the regular price of your items.
These are some of the crucial information about discount pricing that you must understand if you want your business to stay strong in the market. Always remember that discount pricing is just another game of chances. It needs impeccable determination and trust to one’s capacity to run a successful discount campaign. If you think that you are not yet ready to engage in this game, just stay relaxed and enjoy the presence of your products!