ess1. Discounting is a highly addictive drug

You like the sales spike and your customers like a great deal

Keep doing it and you’ll train them to EXPECT a discount

Next thing you know they won’t buy without it

(Prime example: JCPenney tried to change their pricing model to Wal-Mart’s everyday low prices. They stock sank.)

Note: People delay purchases if they see a coupon code box on your site (and might actually not end up buying in the end).

2. Discounting also ERODES the value of the brand.  No longer will customers be willing to pay the same amount.

An experiment from Journal of Consumer Research: A first group of customers who bought a can of organic spaghetti sauce were given a very highly discounted box of spaghetti for $0.50.  A second group of customers who bought that same can of spaghetti sauce were given a free box of spaghetti.  In both scenarios the researchers asked how much they willing to pay to a box of spaghetti.  The first group said $1.83 and the second group, who got the box of spaghetti for free, said $2.98.  This is proof that discounting erodes brand value and makes customers no longer willing to pay the full amount for the same product.

So the burning question is what can you do instead of discounting?

The answer is to always add value by giving some sort of limited time bonus.

Example: If you are a Life Coach and need to fill openings, don’t do a sale, but for say for the next 7 days if you pay full price you will get something additional at no extra cost (ex: special session). 

This gets customers to 1. Pay full price & 2. Act now

Key Message/Takeaway: 1. Add a bonus and 2. Put a time limit on it (so they don’t miss out on the additional value)