Discounts in eCommerce: The Psychology of Selling More

Price is usually what makes or breaks a business. It makes sense because the majority of customers look for how much a product is priced before they even look at the product. A lot of us do that, don’t we?

That’s why pricing is so important. Do a poor job at it and your business will fall into crumbles. Do a great job at it and your business will rise. But how do you do that?

Discounts are the answer. Let’s take a closer look…

How Discounts in eCommerce Influence Sales

In a world that runs on money, nobody is out here trying to waste what they so hardly earned. This is why discounts work so well. Because it gives them a sense of saving money.

Here’s a deeper look into how they influence eCommerce sales:

1. Psychological Triggers

Discounts tap into fundamental psychological triggers that have been ingrained in human behavior. Heard about Dopamine? It’s a neurotransmitter that gives you feelings of pleasure, satisfaction, and motivation.

The allure of a reduced price creates a sense of urgency and excitement, triggering the release of dopamine, and ultimately, making a purchase because it gives them a sense of satisfaction.

Because when consumers perceive they are getting a deal, they are more inclined to make a purchase.

2. Perceived Value

When customers see a discounted price, their perception of the product's value often increases. 

The perceived gap between the original price and the discounted one contributes to a perceived gain, making the purchase appear more favorable and worthwhile.

3. Behavioral Economics at Play

Behavioral economics teaches us that consumers are not always rational decision-makers. Discounts leverage this insight by introducing a sense of irrationality into the buying process. 

Limited-time offers, flash sales, and exclusive discounts exploit the fear of missing out (FOMO) and impulsive tendencies, nudging customers towards a quicker purchasing decision.

Types of Discounts

You can implement discounts in more than one way, just like there are different pricing models like bundled pricing, subscription models, etc.

Each of these discount types might have different success in conversion, as the effectiveness of each discount type depends on the nature of your business.

But we’ll talk about these types of discounts anyway, assuming your business model will be suitable for one or more of these types.

1. Percentage discounts

Let’s assume there’s a mattress on sale. The original price of it is $250, but it is sold for 20% off to sell more.

So it’d be promoted like, “Get your premium mattresses at 20% OFF!”

That’s basically what a percentage discount is. Just take out a percentage of a product’s original price and watch as it sells to more customers.

However, keep in mind that a discount alone won’t drive more sales. You need to pair it with effective marketing as well.

We’ve helped with the marketing of hundreds of eCommerce businesses, generating millions of dollars. If you think your eCommerce business could use some effective social media marketing, get in touch!

Book a FREE 30-min growth session with us to discover what we can do for you.

2. Dollar amount discounts

It’s the same principle as percentage discounts. But instead of a percentage, this displays the exact amount that’s being discounted.

It’ll look something like, “Premium mattresses, available at $50 OFF for first-time buyers!”

3. Buy one, get one (BOGO) offers

Ever read, “Buy 1 sweatshirt, get 1 for free!”?

That’s what a BOGO offer is. Convenience stores usually have this offer live almost every time. Clothing shops are another great example that utilizes this discount method.

4. Bundling and package deals

Bundled offers mean providing a discount when customers buy more than one product in a single purchase. 

You can pair up this bundled deals with a percentage discount or a dollar amount discount to increase the Average Order Value (AOV). 

It’s sort of like a buy more, save more scheme, and customers will be inclined to buy more in a single purchase to get that bundled deal.

5. Limited-time offers and flash sales

This is another discounting method that you can pair up with any of the other four discount types we discussed above. 

The purpose of this method is to make discounts time-sensitive. This creates urgency, driving more people to buy in less time. 

An example is, “Get your next pair of sunglasses at 22% OFF. Offer ends in 7 days!”

When someone reads this offer, they’ll realize two things:

1. Buying a pair of sunglasses unlocks a discount

2. Discount is time-sensitive

For a business, this means:

• More sales in less time

• Bigger AOV since they need to buy a pair to get the discount.

Personalization in Discounts

Discounts in eCommerce have now advanced from generalized offers to personalized discounts. Rather than a one-size-fits-all solution, you can now give a personalized discount to each person in your audience.

You can create such personalized offers by analyzing purchase histories, browsing behaviors, and demographic information. This data forms the foundation for creating targeted offers that are more likely to capture attention and drive conversions.

Challenges and Considerations

It’s eCommerce. It comes with risks. And you have to make sure to measure every step you take to tackle all sorts of challenges.

Even when you’re putting out discounts, there are things worth taking into consideration. Or you might just end up in losses. 

Balancing profitability and customer satisfaction

The bigger the discount, the bigger the customer satisfaction. But that also means lesser profits for you.

That’s why it’s crucial for you to find the right balance. Maybe start by experimenting with the lowest of discounts and gradually increase it.

Evaluate how much these offers are able to satisfy your customers, and how good of a profit they get you. This way, you’ll find that middle ground and you can stick to it.

Monitoring competitors' pricing strategies

Got competitors? Spy on them.

Unless you are a big household brand, you must compete with your competitors to keep selling your stuff. Failing to keep pace with competitor pricing can result in lost opportunities or, conversely, pricing yourself out of the market. 

However, even while you compete, engaging in a relentless race to the bottom on prices can be detrimental. It compromises profitability and may lead to a perception of lower quality. 

Businesses need to differentiate themselves through value propositions beyond pricing, emphasizing unique features, exceptional customer service, and added benefits to avoid getting caught in a price war.

Adapting to market changes

eCommerce is constantly shifting. And adapting pricing strategies to align with emerging trends is a continuous challenge. 

Whether influenced by changes in consumer behavior, technological advancements, or external factors such as economic shifts, you must exhibit agility in adjusting your pricing structures to remain relevant.

It’s a hard challenge to tackle, but it’s something you must overcome to stay thriving!

Conclusion

Thanks for sticking with me to the end. Discounts in eCommerce are really a goldmine of profitable opportunities that every business should make use of.

Just take the time to understand the types of discounts and implement one or more of them that are most suitable for your business model.

It’s the perfect way to sell more products!

But again, you can’t sell more with discounts alone. Because you need marketing to make the discounts reach more and more people.

And that’s where we come in. If you need someone to take care of your marketing, someone who has generated millions of dollars for 100s of eCommerce businesses, get in touch.

Easily book your FREE 30-min discovery call with us right away!