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Free Website Content
Discounting Tips
Tips for Discounting
By Sharon Housley
Discounting
Discounting is a tried and true way to
attract business, both satisfying your customers and
increasing your profits. However, there is more of a
science to discounting than one might initially think.
Understanding this art is critical to offering the most
successful discounts and obtaining optimal results.
Advertising Your Discount
Discounting is all about perception;
while $5 and 20% off a $25 item may mean the same thing,
presenting your discount in one of these manners over
the other can significantly affect your sales. In order
to optimize sales, you must, of course, consider the
consumer. Psychology tells us that, in terms of discounting,
larger numbers are better; the greater the number people
see, the more they feel that they are saving. Therefore,
choose the largest figure when deciding whether to advertise
your discount as a dollar or percent value.
Another area where the consumer's perception
is of great importance is that of the actual price of
the discounted item. Odd value pricing is a very effective
way to consider this factor; when consumers read that
an item is priced at $19.99, they are inclined to react
subconsciously to the first numbers they see, and therefore
unconsciously round the price down to the next monetary
unit. This technique is especially effective when an
item or service is priced just below a multiple of ten.
There are still other factors to consider
in presenting a discount to the customer. While coupon
codes may seem like an appealing way to increase sales,
providing a coupon code box at online checkout may leave
those without a discount feeling left out. Additionally,
many consumers search for active coupon codes for a
company from which they already intend to purchase,
or for a product they already wish to buy. Therefore,
coupon codes have the potential to hurt your profits
by providing discounts on items for which customers
might have paid full price. It is therefore wise to
reconsider the role of coupon codes in your discounting
strategies.
Timing
Discounting is all about now. While it
may be tempting to offer frequent discounts to increase
sales, excessive discounts may actually harm your sales.
If you always have a discount available, consumers will
expect you to have discounts at all times, and may therefore
delay purchasing, making it less likely that they will
make a purchase at all. If you offer discounts with
less frequency, customers will be more likely to feel
a sense of urgency and to be compelled to take advantage
of discounts in the moment.
Running the same discount for a long period
of time can have the same effect as running more short-lived
discounts with great frequency; even if you do not offer
discounts often, a discount that remains active for
a long time will cause many consumers to postpone purchasing,
and therefore makes them more likely to forget about
your discount and forgo spending. Therefore, it is advisable
to set reasonably short lifespans for your discounts.
Implementation
Retail stores often reduce the price of
several items, called "loss leaders," below their market
costs in order to encourage people to come to their
store. While they may lose money through the discount
on the advertised products, the goal of this strategy
is to incite the consumer, once in the store, to buy
other things as well. However, despite the popularity
and success of this strategy, a loss leader may not
work online in the same way it does in retail unless
your product line is very broad.
Although discounts can improve your sales
and profits, they alone may not be as helpful as one
might hope, especially if a discount is less successful
than expected. Therefore, it is important to balance
discounts with upsells. By encouraging consumers to
purchase additional items or upgrades in addition to
running discounts, you will be best able to enhance
your profits by employing multiple marketing strategies
and avoiding placing all of your eggs in the proverbial
basket.
While not quite a discount, offering freeware
is another popular marketing strategy, as it is great
way to allow the customer to test your product or service
before purchasing it. However, poorly designed freeware
may hurt rather than help your sales. If sufficiently
invasive restrictions are not placed on your freeware,
customers may find that your freeware is an adequate
substitute for your paid software, and therefore may
refrain from purchasing. Offering freeware in the form
of free trials can also be unwise; savvy consumers may
know how to avoid restrictions placed on downloads,
potentially making their restricted free trials infinite.
It is best to consider these factors when engineering
restrictions on your freeware, and to do so carefully
and in a way that will compel your customers to purchase
your complete software.
Clearly, much can be said about the art
of discounting. However, the most important consideration
is always the customer. When in doubt, always consider
the customer's perspective, and how they might respond
or react to a particular deal.
About the Author:
Sharon Housley manages marketing for NotePage, Inc.
http://www.notepage.net
, FeedForAll http://www.feedforall.com
software for creating, editing, publishing RSS feeds
and podcasts. In addition Sharon manages marketing for
RecordForAll http://www.recordforall.com
audio recording and editing software.
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copy of the issue or a link to any online posting would
be greatly appreciated send an email to sharon@notepage.net
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