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Discount Pricing Strategy: Proven Examples + Tips for Boosting Sales

5 minutes

Online retailers often offer discounts to boost sales and average order value. But there’s a catch, though. Without the right plan, discounts may undermine revenue and reduce your product’s perceived value. So how can you ensure discount pricing benefits your business? For starters, you need to set goals and know how to achieve them. But, more importantly, you must set up a discount pricing strategy and calculate the correct metrics to meet your goals.

This article will explain what a discount pricing strategy is, give examples of discount pricing strategies, and how to set up a discount pricing strategy in your e-commerce store.

What is a Discount Pricing Strategy?

A discount reduces the price of a good or service. The goal is to attract more customers, increase traffic, move inventory, and generate more sales from discounts. So a discount pricing strategy is a type of promotional pricing strategy that reduces the original price of a product for a limited time.

Shoppers are drawn to discounts because they enjoy getting a good deal. Such a sales promotional strategy can, in turn, create urgency, which may convert more customers into buyers.

What are the Advantages of a Discount Pricing Strategy?

Discount pricing has a significant impact on your earnings, hence it’s crucial to have a strategy in place. But most retailers want to know what they stand to benefit from having one. So let’s discuss the benefits, shall we?

#1 You attract customer interest

You can’t attract customer interest without a compelling strategy. Offer a discount or free trial period to new customers. This allows them to try your products risk-free. Besides, customers are most impressed by the money-back guarantee and free trial offers.

#2 It gets rid of inventory

If you have products that will be discontinued or are about to expire, add them to your marketing efforts. Giving old inventory as complimentary gifts to new subscribers kills two birds. First, you reduce your inventory by giving out phased-out products. Second, you establish a strong relationship by giving new customers free (or discounted) products.

#3 It reduces abandoned cart rates

A recent Baymard Institute report revealed that about 70% of shoppers abandon their cart. With a discount pricing strategy, you can offer limited-time discounts on products customers abandon before checking out. Email customers to remind them that they have items in their carts and can get a discount if they complete their order.

#4 It can create brand exclusivity

Make your customers feel special by offering premium, unique discounts to a select sub-set of your buyers. When you show loyalty to your customers, it increases the chances that they will in turn show loyalty to your brand.

Grow your sales with high-performing deals.

What are the Disadvantages of a Discount Pricing Strategy?

On the flip side, a discount pricing strateg isn’t always appropriate. Here are some reasons why you may want to avoid discounting your products.

#1 Customers may come to expect discounts

If you’re running discounts too regularly, your customers may come to depend on them, and won’t purchase your products at full price, or any time you’re not running a promotion.

#2 It’s possible to over-discount your products

Another potential disadvantage is the chance that you could mistakenly over-discount your products. It’s important to thoroughly check the numbers to make sure that your discount pricing strategy accounts for shipping costs, taxes, and other expenses, so you’re not losing money.

#3 Your store may be seen as "less premium"

Many brands choose to avoid a discount pricing strategy because of the chances that it can lower the perception of your brand. For example, if your products are reduced or on sale, a customer may take this to mean that your products are low quality, or not “high-end”.

#4 You can get stuck in a discount trap

When you create a discount pricing strategy for a certain product, it’s important to know when to stop. For example, if you are offering a free trial or a discounted subscription for the first month, your customers may become used to this pricing. Switching to the full product price at the end of the promotion may seem too expensive once customers have become used to the discounted price.

Types of discount pricing with proven examples

Let’s take a look at some common examples of discount pricing strategies that have delivered amazing results to thousands of brands over the years.

#1 Volume discount pricing strategy

With a volume discount pricing strategy, your customers pay less if they buy in bulk. For instance, Ujido, an online matcha tea provider, gives $6 OFF if a shopper buys 15 packets of matcha energy.

Looking at the example above, this means that bulk discounts help encourage customers to buy more. In addition, it is an excellent way to clear inventory, sell more products, raise average order value, and keep customers happy.

A volume discount pricing strategy:

#2 Loyalty/referral discounts for specific customers

Offering a loyalty program to repeat buyers shows you appreciate them. It also encourages them to buy from you again. After a customer spends a specific amount, appreciate them by offering discounts.

Those who refer others to your store should be rewarded as well. Take Rothy’s, for example; they use word-of-mouth to outperform all other channels for brand awareness.

Rothy’s referral program reward structure includes the Advocate Reward and Friend Offer. The former offers $20 off the next purchase over $50, while the latter gives $20 off the first purchase.

A referral discount pricing strategy:

#3 Flash sales

A flash sale discount is a promotion offered by an online store for a short time. Flash sales might be advantageous if competitors only run promotions at specified periods of the year. By giving a time-sensitive offer, you can build urgency and fear of missing out (FOMO).

Also, you can have a lot of success by running sales ahead of your competitors because you’ll be giving shoppers attractive prices when others aren’t

Zulily, for instance, targets busy moms, offering products like baby clothes and accessories at reduced low for a short time.

A flash sale:

#4 Seasonal discounts

Special offers connected to major events or holidays are called seasonal discounts. Retailers use this discount pricing strategy to boost sales, traffic and income.

In the example above, Dick’s Sporting Goods gave 50% off site wide on Memorial Day. So shoppers got to save big on sports apparel and accessories.

Seasonal discounts:

How to Set Up Your Discount Pricing Strategy in PickyStory

Now that we’ve looked at some of the most popular discount pricing strategy examples out there, let’s take a look at how you can use PickyStory (an e-commerce conversion platform specializing in product deals) to set up your discount strategies.

#1 Use “Kits” to create a volume discount pricing strategy

PickyStory’s “Kits” feature is ideal for volume discount pricing strategies. Why sell one item when you can sell packs of this same (or even a different) product by offering a discount for bulk buying in bulk? You can use PickyStory’s Kits deal to set up discounts for buying in bulk and display them on product pages or just about anywhere else in your store.

#2 Use “Coupons” for loyalty and referral discounts

Customers always love a good bargain. And what better way to appreciate customers than loyalty and referral discounts?

With PickyStory, you can create sitewide coupon codes with just a few clicks. You can send the code to your entire customer base, advertise it on your site, or only send it to exclusive customers, depending on your discount pricing strategy.

#3 Use any PickyStory deal for flash sales

If you’re planning a flash sale, you can use PickyStory to discount certain products, run sitewide discounts with coupons, or create a bundle deal that’s on sale for a certain amount of time. It’s easy to switch your deals on or off with PickyStory to suit your discount pricing strategy.

#4 Try "Combo Products" for seasonal discount pricing strategies

PickyStory is a great solution for simple sale management and a convenient tool for scheduling seasonal sales and discounts. With just a few clicks, you can schedule holiday sales, end of season promotions, and any other seasonal discounts you are looking to offer.

The benefit of having a discount pricing strategy cannot be overemphasized – you need a strategic approach for discounting to pay off. By identifying your goals and choosing the right pricing discount, you can avoid common discounting challenges, boost sales and increase revenue.

However you choose to run discounts in your store, PickyStory is a great tool to manage and optimize your discount pricing strategy.

Grow your sales with high-performing deals.

Generate more revenue from every store visit.

Offer irresistible deals across your buyer's journey.

Published on June 15, 2022
Topics: Sales and Conversions

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Discount Pricing Strategy: Proven Examples + Tips for Boosting Sales

What is a Discount Pricing Strategy?

What are the Advantages of a Discount Pricing Strategy?

#1 You attract customer interest

#2 It gets rid of inventory

#3 It reduces abandoned cart rates

#4 It can create brand exclusivity

Grow your sales with high-performing deals.

What are the Disadvantages of a Discount Pricing Strategy?

#1 Customers may come to expect discounts

#2 It’s possible to over-discount your products

#3 Your store may be seen as "less premium"

#4 You can get stuck in a discount trap

Types of discount pricing with proven examples

#1 Volume discount pricing strategy

#2 Loyalty/referral discounts for specific customers

#3 Flash sales

#4 Seasonal discounts

How to Set Up Your Discount Pricing Strategy in PickyStory

#1 Use “Kits” to create a volume discount pricing strategy

#2 Use “Coupons” for loyalty and referral discounts

#3 Use any PickyStory deal for flash sales

#4 Try "Combo Products" for seasonal discount pricing strategies

Grow your sales with high-performing deals.

Generate more revenue from every store visit.

Offer irresistible deals across your buyer's journey.

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