Why And How Discounts Work
The Psychology Behind Discounts
Everyone loves discounts, and you always need people to buy your product. Discounts in all forms are the primary reason people buy a product, mainly due to pulling for them. In this article, we will dive deep into the psychology of discounts and what kind of discounts work best to make most people buy. But let me first explain why discounts work at all.
Why do discounts work?
Most discounts work on the principle of urgency, as the discounts are only valid for a specified period. If people don’t buy the product now, at a lower price, they are highly likely to miss out on saving some cash. There is urgency involved. That anticipation of being left out is precisely why discounts work.
The Pleasure Principle and the Regulatory Focus Theory reveal that people seek pleasure and avoid pain. For example, the thought of missing a discount is a pain that people will want to avoid.
Types Of Discounts
As there are many ways to give your customers discounts. You can give them free products when they purchase specific (amounts) of items, free shipping, a fixed price, a percentage off, etc. You can even give your customers a discount on top of another discount.
Oddly enough, some of the above actually work better than others. For instance, people prefer 50% more of the same product at the same price, compared to saving 33%, even though that comes to the same thing. Again, people prefer being given a 25% discount after a 20% discount than being offered a single 40% discount, and yes, that still comes to the exact discounted total.
A Quick Word On The ‘9’
Adding a 9 at the end of your (discount) price is sometimes the best strategy. This stands for those products that need to look more affordable or cheap. For luxury goods, that ‘cheap’ psychology could backfire on the price as one of the unique buying reasons for a luxury product is quality, and people are willing to pay for quality. A product that is priced at 399 looks ‘inferior’ to a similar product priced at 400. It’s just something to keep in mind.
Discounts for existing customers
Discounts are not only used to acquire new customers but also as a way to show appreciation to your customers. There is little value in showing appreciation for such high-end clients other than giving them discounts. You can offer discounts through a free product, a discount code, or anything else that comes to mind.
These discounts or gestures don’t have to be so huge as to make one appreciate the effort. The customer does not only enjoy this one; they change their behavior! It is true what they say; it is the thought that matters.
Conclusion:
Discounts represent one of the most critical decision-making instances in consumer purchasing behavior through their utilization of concepts of urgency and loss aversion-oriented behavior. Remember that the right discount at the right time might just work wonders for your bottom line and ensure customer loyalty.
