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Offering discounts can be counterproductive. A lot of customers might forgo your offer or charge to a competitor later. This is mainly true according to the value of your product or service. If you offer top-notch or costly products, the odds are higher that you'll have a negative experience with discounts.
It's no secret that people love a good deal. Discounts and coupons are powerful marketing tools that can entice even the most resistant shopper to make a purchase. But when it comes to premium products, discounts may not be the best pricing strategy.
Premium products are, by definition, high-quality items that come with a higher price tag. Discounting these items sends the wrong message to customers - it suggests that the product is not worth its full price. This can damage the perceived value of the product and deter customers from buying it even at its regular price.
There are other ways to attract buyers to premium products without resorting to discounts. Offering free shipping or a free gift with purchase are two effective strategies for increasing sales without sacrificing profit margins.
Examples of these premium brands are Ferrari and Apple. They do not believe in discounting.
Once you start with discounts potential customers will start to wait for them. This damages the consistency of your daily sales when not running any discounts. Customers may wait for the next sale or go with a rival.
This is why discounts on luxury items are rare. Discounts draw attention to costs, which isn't helpful when the price of the product is already high. Discounts should be avoided if you offer high-end goods. Maintain your focus on the high quality of your goods.
Rather than focusing on discounts you could focus on adding free gifts to your products to remove the focus from the high pricing, which always hurts our brain a little.
Discounting should be avoided at all costs if the goals are to command a premium position within the market, to ensure best-in-class resale values, to deliver a quality product with a first-class experience, to maintain a level of profitability consistent with your financial objectives, and to deliver repeat business from loyal customers.
Are you curious about how to apply this bias in experimentation? We've got that information available for you!