The Advantages of Utilizing Discounts for Your Business

As a brand, it’s important to come up with strategies to amp up sales and reel in new and existing customers. One simple yet often overlooked way is offering discounts.

In the context of business and marketing, a discount is essentially a deduction from the usual price of a product or service. Offering discounts is among the quickest ways to attract customers, boost sales, and cultivate customer loyalty — among its many advantages, which we will discuss in more detail later.

The paradox of running a business, however, is that you want to gain profit but also help customers “save” money. Discounts provide the right balance, as counter-intuitive as it may sound, as long as you implement the right strategy. 

Why should you offer discounts wisely?

While offering discounts provide a lot of benefits both for the customer and the brand, it also has potential cons that you need to be aware of:

  • Lowered perceived value: Research has shown that customers who paid for a certain product at full price have a tendency to have higher expectations on the product’s “performance” compared to products that were bought at a discounted price. This means that discounted products can be perceived to have lower value.
  • Risk of profit loss: When the price of a product or service is slashed down too low, you run the risk of not gaining profit at all due to lower margins. Offering discounts without knowing the real value of your product/service defeats the purpose of discount promotions.

This is why it’s crucial to offer discounts wisely. Establish your objectives before setting up your discount offers, and evaluate exactly how much a product or service costs to produce and develop. This way, it’s easier to set the right metrics and ensure that you’re not lowering your price too much.

The key here is to give your customers incentives, but at the same time, you have to make sure that your business is growing and that you’re making a profit.

What are the advantages of utilizing discounts?

As we mentioned, offering discounts provides myriads of advantages both to consumers and your business. Here are 4 of the main ones:

1. Draws both new and existing customers

Since customers are naturally drawn to products that provide value for their money, offering quality products at a lower price attracts not only new customers but also existing ones.

Remember that the main goal is to increase customers and profits, all while encouraging your returning customers to keep coming back for more. This is why discount promotions and loyalty programs often go hand in hand: you incentivize your customers while also building and growing your client base. 

Bonus Tip: Sweeten the deal even more by offering time-limited discounts. This plays into a customer’s natural FOMO (fear of missing out), and it also adds anticipation as to when the next promo will be.

2. Frees up room for new products

Among the practical benefits of discounts, there is an effective way to sell out your current products to make room for the new batch. This is especially useful for seasonal products, those that have been in your inventory for a while, or those that you don’t plan on selling anymore. 

You have to make sure that your inventory moves fast to make sure that every batch is fresh, and discounts greatly help in this.

Move discounted products to the front of the store to easily catch the attention of customers. For e-commerce businesses, create an advertising campaign and ensure that the discounted products have their own separate section in your store and are placed above the fold.

Bonus Tip: If there are defects in the product due to being stocked for too long, be upfront about it to your customers. Customers appreciate it when brands are transparent and honest.

3. Helps customers choose your brand over competitors

Price is one of the factors that customers consider when they are choosing products/services to buy. Discounts can give you a leg up on the competition, especially if you’re offering something that others don’t. Customers will be more eager to shop with you if they know they can get something valuable out of the deal.

Bonus Tip: The crucial thing here is to not sell yourself short. Ensure that the products you put up at discounted prices provide great value to your customers. Remember that price isn’t the only thing that customers consider in their purchasing decision. 

4. Improves the image of your brand

Showing that you care for your customers is essential for a successful business. Among the many ways you can show how much you value your customers is to make every customer’s shopping experience unique to them. 

Be intentional in providing discounts. Consider the timing, the right audience, and the right kind of product or service. When you provide specific discounts that are catered to your customer’s unique needs, they will view you as a brand who truly cares about their individuality instead of just being another transaction.

Additionally, building customer trust is essential when you sell specialized and regulated products, so it’s crucial to cultivate a positive image for your brand. 

Bonus Tip: Segmenting your audiences is valuable when strategizing your discount promotions. For example, potential customers would appreciate it more if an introductory price is offered to them. Long-time customers would be happier if you offer discounts to products they’ve been buying again and again, or products that are good compliments to their favorites. 

Offering discounts can be a counterintuitive approach if you’re not careful — you may run the risk of not gaining enough profits, your discounted products may be perceived as subpar, or that you may be selling your brand short. 

Despite these risks, however, it cannot be denied that the advantages discounts provide outweighs its disadvantages if you have the proper strategy in place. It’s important to have a well-thought-out plan prior to offering your discount promotions, establish clear objectives, and know your product’s worth. This will ensure that you don’t go off track or lose sight of what your ultimate goal is.
If you need further guidance on how to implement a discount promotion strategy for your business, Alpine IQ is here to help. Visit us at to learn more!

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