As a business owner, you already know the power of discounting products to increase demand. But which products do you give a discount on? by how much? for how long? These are all questions that come to mind when considering the option of reducing prices. They’re also important questions due to the nature of how pricing affects consumer psychology.
You might have heard about the power of ending prices with the number 9. Researchers have discovered that items priced at $39 sell more than the cheaper price point of $34.
Or maybe you’ve also heard about the overbearing power of the word “free,” which has been shown to motivate buyers even when the perceived value and price of two options remain the same.
Now, let’s take a look at a few of the more popular promotional pricing options that you can deploy:
Markdowns: This is when you reduce prices on a wide range of products in your store for all customers. This is especially effective when backed by a wider advertising campaign, be it through paid or unpaid channels.
Loss Leaders: When you know that certain products are in demand, regardless of whether it is a luxury item like an iPad or everyday need like under garments; simply offer a steep discount to draw new customers who will make up with additional purchases of the more profitable offers. Loss leadership strategies are great for selling overstocked items, increasing traffic to your store, and generating brand awareness. A similar approach can be adopted by manufacturers for market penetration.
Bundle Pricing: This is a great way to generate a higher perceived value for a lower cost that customers have a hard time staying away from. Whether it’s a “buy one, get one free” deal or a “3 for the price of 1” special, this tactic is great for making customers feel that they are getting more for what they are paying. As a bonus, this is a huge draw to then entice those customers to buy higher priced items once they are in.