Have seen the terms ‘deep discounts’ and ‘everyday low prices?’ Of course, you have. In an online retail business, catching a shopper’s attention is a big task. As we all know that buyers always enjoy great discounts on their purchases. Now, what if we told you that these two unique and ever-so-used pricing strategies can help you retain more consumers? Yes, so read this blog where we will take a wide tour of the topics and help you gain some insights into the significance of deep discounting and how buyer psychology can impact.
Let us begin.
To begin with, as a retailer, while you offer discounts, it might attract customers and make them feel good, as with deep discounts, online retailers can create a sense of urgency and encourage customers to make a purchase before the promotion ends. This can be particularly effective for seasonal items or products that are popular during certain times of the year.
On the other hand, offering everyday low prices can also help online retailers build customer loyalty and attract price-sensitive shoppers who are always on the lookout for the best deals. This type of pricing strategy can be especially important in competitive markets where customers have many options to choose from. Yes, the perspective becomes clear that the market is always price-sensitive.
The practice of everyday low pricing and deep discounting is used in the ecommerce for years. Today we will look at different types of deep discounting strategies and their pros and cons.
What is Deep Discount Pricing?
"Discount pricing is the art of making customers feel like they're getting a great deal, while still keeping your business profitable."
It is a promotional pricing strategy that acts by slashing the original price of a product or service with the purpose of driving more sales, increasing traffic, and move the inventory. The important aspect to understand here is that the concept creates a sense of excitement and helps the consumers make a decision right now instead of later. It is a known fact that customers are drawn towards lower prices as they like the feeling of getting a good deal. As consumers compare prices all across the eCommerce platforms, you help them finalize a product at a given discounted price thereby increasing sales.
Investing in a pricing intelligent platform can help with the successful implementation of discounted pricing while making informed decisions. PriceIntelGuru is the best pricing channel that industries use to carve the best pricing strategies for their businesses.
Types of Discount Pricing
Though all discounted pricing aims at offering some percentage off the original market price, there are different types of deep discounting techniques. It is essential for a business to understand that all strategies are not equal and might not work the same way for all businesses. The psychological discounting strategy that works for your industry will depend on the specific products, industry, business objectives, and comprehensive business strategy. Again, the pricing intelligence platform can help in knowing how market price can impact the buying decision of the customers. It helps in discounted pricing execution.
Here’s a look at some common deep discounting techniques and their benefits.
1. Flash Sale
This is a very commonly used technique in everyday low pricing or deep discounting. It is like a sale for only a few hours or a day. This is used to encourage quick purchases. For instance, while browsing on Amazon, you saw a pair of shoes and went ahead to get details. One thing was flashing that you can get the shoes for just $299 instead of $399 but only if you shop in 35 minutes. Yes, that is called a flash sale. The chances of people buying that product become higher with a flash sale. This kind of data can be availed with our exclusive data extraction tools.
2. Seasonal Discounts
A seasonal discount is very much what the name suggests. Brands offer promotional offers and discounts on seasonal products during a specific season. At times, seasonal discounts are applied for selling out-of-season items as well. For example, many stores offer discounts on winter coats during the spring season as they are not needed anymore.
3. Festive Discounts
This is also a very popular way of encouraging the sale. Festive discounts are offered during a certain festival. For example, the Black Friday and Cyber Monday sale is done during the Thanks giving period. Additionally, you also see special Christmas or holiday discounts given around that time. This is to assume that people tend to buy more during festivals. It is a time to celebrate and a completely positive vibe is felt during that time. PriceIntelguru can manage this kind of festive discount in an automated manner over its platform.
4. Clearance Sale
Clearance is a term that is used by the marketers for indicating that their products are on sale at discounted prices. Most of the clearance sales offer discounts such as buy one get one free for a specific period of time. The retail stores offer discounts with an aim of getting the stock liquidated.
5. Volume Discounts
The volume discount lures the buyers to purchase the goods in large quantities. Bundling is a great idea for quantity discounts. Stores reward the buyers with a reduced price who buy in bulk on a group of products. When people buy in bulk, retailers can reduce their inventories.
Discount Pricing for Ecommerce and Retail
It is a well-established fact that deep discounting pricing strategy works for the retail and eCommerce sectors. For retailers, discount pricing can be a great way for liquidating the products that are not required. For some businesses the pros of discounted pricing are not quite obvious as the cons. The idea of getting a deal with discounted prices might seem perfect but it is the value people offer in exchange for the value you offer. Hence, it is important to move carefully while discounting.
Benefits of Discounted pricing
1. Quick Decisions
When you offer discounts to your customers, they don’t think much while making the buying decision. Discount reduces the activation energy for the buyers and enables them to try your product before they want to commit.
2. Closing the Deals
Deals that are on the verge of getting finalized can be converted by offering discounts. Thus, discount pricing is an effective and simple way of increasing the sales. However, it should not become a mandate for all the sales deals. But it can certainly prove to be helpful when trying to close a particular deal.
Everyday Low Pricing – The Concept
Here the concept is a bit different. In this kind of pricing strategy, you always offer a low price for everything you sell. Your customers know that this is the price that they will get whenever they want to buy something on every product you sell.
Basically, in everyday low pricing technique, you as a retailer will always have clarity and will not go for constant price changes. This type of strategy works for only those customers who buy solely depending on the price. But not to forget, more often, customers then start to associate your brand with cheap products.
Making a decision to stick to a pricing strategy that works for your business is a tough one. We understand the dilemma, and that’s why we offer wide range of services and expertise on our pricing intelligence platform.
Why Discounting should be a Short-Term Strategy?
It is not possible for a business to succeed with the help of discounted pricing as it can affect the bottom line. Also, it is not suitable for new products. Discounting should be used as a short-term strategy as the cons outweigh the pros. Discounted pricing is not sustainable due to higher churn rate, lower profit margin, less willingness to pay, and unpredictable growth. Most importantly, discounting a product hits the perceived value. The customers are not likely to repeat purchases if they perceive our product to be of high value.
Add Value to Your Discounts
When it comes to adding value to your discounts, consider offering free or discounted upgrades, extended warranties, or loyalty rewards. These incentives can help differentiate your brand and create a positive perception of your products or services.
Investing in a pricing intelligence platform like PriceIntelGuru can help in implementing your competitive price strategy.
Harness the Power of Low Pricing
Low pricing is possible with great strategy and precise timing. It is about understanding which discounting strategy will work for your business. PriceIntelGuru helps you define a strategy that can deliver the best results for your product or service. As it is not a one-show-fits-all policy. You have to bifurcate the best that can be done for your business. So, are you still stuck with the old tactics? It is time to move ahead and get the best thing working for you.
Make deep discounting your favorite way to stay ahead of the competition. Then why wait, Book a free demo now!
Frequently Asked Questions (FAQ)
What is an everyday low pricing strategy?
Everyday Low Pricing (EDLP) is a retail pricing strategy where a store consistently offers low prices on its products without temporary sales or discounts. This pricing approach is designed to offer customers lower prices throughout the year, which could potentially increase customer loyalty and drive higher sales volume. EDLP can also reduce marketing and advertising costs since retailers can avoid the need to advertise sales or promotions.
What are the effects of everyday low pricing?
Everyday low pricing can result in increased customer loyalty, higher sales volume, and a more competitive edge in the market. However, it can also lead to decreased profit margins and potential negative effects on product quality. Overall, the effects of everyday low pricing services can vary depending on the industry, competition, and overall business strategy.
How deep discount pricing increasing sales?
Deep discount pricing can increase sales by attracting price-sensitive customers who might not have otherwise considered the product. This strategy can also create a sense of urgency, encouraging consumers to make a purchase before the discount expires. However, it's important to consider the potential impact on profit margins and brand perception before implementing this pricing strategy.