The 4 Types of Discount Pricing to Skyrocket Sales & Profits
Trade takes different shapes and forms, whether in the digital world, or the physical world, discounts remain the most powerful strategy to boost sales, attract new customers, and retain existing ones. Whether you’re an e-store owner, a marketer, or just someone curious about pricing strategies, understanding the various types of discounts can be incredibly valuable. In this article, we’ll explore the most common types of discounts, explain how they can benefit your WooCommerce business, we’ll cover things like percentage discounts, and buy-one-get-one deals, and how they can make businesses more money and keep customers happy.
But first, let’s understand—Are discounts still relevant nowadays?
Customers will always be Drawn to Discounts, No Matter the Time or The Place
Discounts are irresistible to customers across all ages and demographics, according to surveys conducted by RetailMeNot. Their findings reveal that nearly 70% of millennials actively seek out deals before making a purchase, while two-thirds of people are more inclined to buy if they have a coupon, regardless of their initial intentions. Moreover, a staggering 80% are willing to try a new brand if it offers them a discount, showcasing the powerful allure of savings. Additionally, discounts trigger the release of oxytocin, creating a sense of accomplishment and excitement, while also making customers feel savvy for securing a good deal and saving money.
The Importance of Discount Strategies
- Attracting New Customers: Discounts can entice first-time buyers who might be hesitant to purchase at full price.
- Retaining Existing Customers: Offering exclusive deals to loyal customers can enhance their satisfaction and encourage repeat business.
- Clearing Inventory: Discounts can help move excess or seasonal stock, making way for new products.
- Increasing Average Order Value: Volume discounts and bundle offers can encourage customers to spend more per transaction.
- Gaining a Competitive Edge: Strategic discounting can differentiate your business from competitors, making your offers more attractive.
1. Percentage Discount
In a study conducted by aampe—over 28,000 eCommerce SMS messages and push notifications from retailers such as Macy’s, Walmart, Amazon, and others, found that over 81% of these messages contained a discount, and the most popular discount percentage was 50%!
Jonah Berger, a marketing professor and author of the book “Contagious: Why Things Catch On,” discussed the science behind why certain ideas, products, or content become viral and widely shared. He theorized that percentage discounts create a sense of exclusivity. For example, “Get 20% off!” implies that the customer is part of an elite group receiving this offer. Unlike “Get x $ off, they may not generate as much buzz because they lack the social currency aspect.
During seasonal promotions such as Black Friday, you can use Discount Products Prices in WooCommerce Plugin to schedule discounts with active date settings and implement custom discount strategies to products by creating discounts as a percentage off the regular price.
2. Dollar Amount Discount
Dollar amount discounts involve subtracting a fixed dollar value from the original price. For instance, if a product costs $150 and there’s a $30 discount, the final price becomes $120.
We will again borrow Jonah Berger’s ideas in Contagious as he offers an interesting rule which is The Rule of 100, this rule states the following:
“For products or services over $100, a dollar discount will be more effective. For those under $100, things reverse, and a percentage discount will likely be more effective.”
3. Buy One, Get One (BOGO) Deals
BOGO is a powerful discounting strategy that encourages customers to increase their purchases and boosts sales revenue.
Essentially, BOGO offers customers a discounted price on one product when they purchase another product of equal or higher value. This strategy can be likened to a bundle discount, where customers receive a discount for buying multiple items together.
Research indicates that BOGO deals can be more effective than percentage discounts, as they tend to attract more attention, particularly when the discount level is substantial.
Retailers can capitalize on this by developing promotional strategies that capture consumer attention and drive sales. With tools like the Dynamic Pricing & Bulk Quantity Discounts Plugin, businesses can easily set up rules for bundle deals on specific products. For example, they can offer a discounted price if customers purchase two units of the same product.
Successful Businesses Used the BOGO Strategy
- Burger King has run successful BOGO promotions, offering free Whopper with the first purchase via Click & Collect method. These deals attract attention and encourage customers to make additional purchases, ultimately driving sales.
- TOMS is a well-known footwear brand that pioneered the “One for One” giving program. For every pair of shoes purchased, TOMS donates a pair of shoes to someone in need. Their BOGO model has resonated with consumers who appreciate the social impact of their purchases.
Best Practices for Implementing Discounts
- Clear Communication: Ensure that the BOGO offer, or any other discount is clearly communicated to customers. Using Dynamic Pricing & Bulk Quantity Discounts Plugin, you can display real-time messages showcasing the exact discounts they’re unlocking with their bundle purchases.
- Create Urgency: Time limited offers can drive sales. Use plugins like Discount Products Prices in WooCommerce Plugin to set active dates for discounts.
- Segment Your Customers: Use customer data to create targeted discounts that appeal to specific groups.
- Combine Discounts Strategically: Offer combinations of percentage and dollar discounts or bundle deals to maximize appeal.
- Monitor and Adjust: Regularly review the performance of your discount strategies and adjust them as needed to improve effectiveness.
4. Volume Discount
Also known as bulk discount, this strategy rewards customers for purchasing larger quantities of a product, a tactic long utilized by wholesalers. WooCommerce retailers can also leverage this approach to drive sales.
BOGO deals can be seen as a subset of volume discounts, given their similarity.
Implementing volume discounts is made easy with tools like Dynamic Pricing & Bulk Quantity Discounts Plugin. This plugin allows you to offer discounts in various forms, providing flexibility to cater to different user roles with specific wholesale pricing options.
By bundling products from different categories using the plugin, businesses can adopt dynamic strategies to attract customers. These tools enable the implementation of personalized discount strategies to enhance sales and customer retention.
conclusion
In the dynamic landscape of eCommerce, discounts are like secret weapons for WooCommerce stores aiming to stand out. Whether it’s offering percentage discounts or volume deals, these strategies help attract customers, clear out stock, and stay ahead of the competition. In simple terms, discounts not only boost short-term sales but also set the stage for long-term success in the ever-changing online market.
