Types of Promotional Pricing Strategies + Tips

When faced with the selection of paying packed worth for an item or buying a similar item for a discount, most shoppers opt for the discount. According to a 2024 survey, nearly 70% of consumers would buy from a competitor if it offered lower prices.

To assist your own business earnings this benevolent of competitive advantage, you can propose discounted prices for a limited period to boost sales and inspire recent customers to try your brand. discover about the different types of discounts and tips for how to use them effectively, without undermining your earnings spread.

What is promotional pricing?

Promotional pricing is a pricing way in which you propose a worth reduction for a product or service during a specific period. Merchants implement promotional pricing strategies to make a sense of urgency and boost sales.

Offering discounted prices and special deals during the promotional period can drive sales from worth-sensitive customers. These customers are more likely to make purchase decisions based on worth and the perceived worth of a limited-period propose.

Types of promotional pricing strategies

• Flash sales
• Loyalty programs
• Buy one, get one free (BOGO)
• Seasonal sales
• Coupons and promo codes

There are several promotional pricing strategies to consider for your business, including:

Flash sales

A flash sale is a promotional pricing way that involves temporarily reducing the worth of a product or service. By offering a limited amount of goods at a discount for only a short period, merchants can tap into consumers’ sense of FOMO (terror of missing out) and inspire impulse purchases.

You can use flash sales to boost sales volume and obvious out excess distribute, introduce a recent product line, or boost your short-term money flow. For example, Cocokind, a plant-based, sustainable skin worry business, features weekend flash sales on its online store.

Loyalty programs

A loyalty program can inspire repeat purchases by rewarding faithful customers with discounts, store credits, and other benefits like free shipping or early access to recent product lines. According to one survey, 70% of respondents said these programs were a leading factor in driving brand loyalty.

For example, Mirenesse, Australia’s leading sustainable cosmetics brand, encourages customer loyalty with its adore Rewards program. The loyalty program features benefits such as points buyers can redeem for upcoming purchases. Customers earn points by making purchases, referring a partner to the website, reviewing Mirenesse products, or posting about the brand on social media.

Buy one, get one free (BOGO)

Buy one, get one free (BOGO) pricing promotions inspire customers to purchase knowing they’ll receive another item for free. For the correct types of products, a BOGO campaign can attract recent customers and navigator to larger orders.

For example, Kyloe In The Wild, which sells sunglasses made of recycled plastic, features a buy one, get one free call-to-action (CTA) button on the main landing page of its online store. You can implement your own BOGO program with the assist of BOGO apps.

Seasonal sales

These worth promotions are useful for companies like clothing brands changing their offerings every period. Seasonal promotional pricing can assist boost sales during more specific periods as well, like Black Friday and Cyber Monday (BFCM).

For example, Blenders Eyewear used Shopify’s Launchpad tool to automatically transformation its website design to characteristic flash sales for Black Friday and Cyber Monday. The shift helped boost sales tenfold in during the sale period.

Coupons and promo codes

Another way to provide customers a promotional worth is coupons or promotional codes that are excellent for discounts or perks. Customers typically type in a coupon number or promo code at checkout to receive the discount.

Merchants can use coupons and promo codes to target specific customer segments, like repeat buyers or first-period customers. For example, the t-shirt and accessory business Out of Print features a $5 off promo code for recent customers who subscribe to its email newsletter.

Is promotional pricing correct for your business?

Promotional pricing campaigns can boost sales and temporarily stimulate demand for a particular product or service. However, they can reduce your earnings margins and the perceived worth of your brand if used incorrectly. Here are some of the pros and cons:

Advantages

• Increased sales. By creating a sense of urgency or the perception of a excellent deal, promotional pricing can boost your sales volume.
• Better inventory management. Promotional pricing can assist you sell excess inventory that costs money to keep in a warehouse.
• Competitive advantage. Lower prices for your products or services can assist your business stand out from the competition in a crowded economy.

Disadvantages

• Lower earnings margins. If you run frequent promotions, you uncertainty eroding earnings margins by selling your products or services for less than they’re worth or less than you require to profit a excellent earnings spread.
• Decreased brand image. If your customers expect discounts for your offerings regularly, it can tarnish the perceived worth of your brand by lowering the worth customers are willing to pay.
• Hurt customer loyalty. Poorly timed promotional pricing strategies can erode customer loyalty among shoppers who bought your products at packed worth only to view a promotional worth after they made their purchases.

Tips for implementing promotional pricing 

• Prioritize existing customers
• borrowing promotional apps
• Monitor the results
• Consider the worth elasticity of demand

There are a few best practices to consider when implementing your promotional pricing campaign, including:

Prioritize existing customers

To avoid making your customers feel devalued as your promotional pricing campaigns focus on recent customer purchase, reward your most faithful customers first. For example, instead of running a paid advertising campaign featuring promo codes for recent customers, consider launching an email marketing campaign. A BOGO promotion targeted at customers who’ve already made purchases from your business could be more effective.

borrowing promotional apps

Use software tools and applications to facilitate your promotional pricing campaigns. For example, Shopify offers the Launchpad app, an ecommerce automation software tool to assist merchants schedule and track promotional sales. Similarly, merchants can explore the various BOGO apps and discount apps with real-period analytics and automation features.

Monitor the results

Keep an eye on your key act indicators (KPIs) to identify which promotional pricing campaigns are working, which require adjustment, and which are costing you more money than they’re worth. Some of the significant KPIs to keep in mind when running a promotional pricing campaign include:

• Customer purchase expense (CAC). Use CAC to determine how much money your business spent on a promotional pricing campaign to earn a recent customer.
• Click-through rate (CTR). This metric measures how often potential customers click on a promotional pricing advertisement, pop-up, or CTA.
• profitability on property (ROI). You can compute the ROI of your promotional pricing campaigns to determine if you earn enough to justify the expense of the campaign.
• Sales lift. Sales lift focuses on the boost in sales generated by a promotional pricing campaign.

Consider the worth elasticity of demand

worth elasticity of demand (PED) refers to how much a product’s worth transformation affects supply or demand for the product. If the worth for the product you’re running a promotion for is elastic, the economy demand for it will surge because more consumers will purchase from you instead of your competitors.

By contrast, if the worth of your product is inelastic (as in the case of essential products like prescription drugs or gasoline), then a worth reduction will have little impact on sales volume. By calculating the worth elasticity of your products, you can make more informed decisions about whether promotional pricing is useful or whether you should consider a different pricing way.