The psychology of better discounts

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💡 The Science of Choosing Discounts

Marketers often struggle with a simple decision: should you offer a percentage off or a flat dollar discount? The choice may seem insignificant, but research shows it can have a significant impact on revenue. One retailer even increased sales by nearly 10% simply by selecting the right discount type.

Here Are the Core Strategies

1️⃣ Use Percentages for Storewide Promotions: When discounts apply across your entire catalog, percentages outperform flat amounts. Shoppers spend more and fill larger carts because a percentage feels unlimited. The mental trigger is simple: “The more I buy, the more I save.” Studies show spending can climb by over 40% and basket sizes by more than 50% with this structure.

2️⃣ Use Dollar Amounts for Single Products: When promoting a specific product or brand, a flat discount is the stronger choice. The brain prefers clarity when the deal involves one item. “$15 off” is instantly understood, while calculating 15% requires effort. Removing that mental math makes the offer more compelling and easier to act on.

3️⃣ Lean Into Perceived Value: Discounts change mood as much as they change price. A percentage on a wide range of items feels generous and open-ended, while a flat-dollar reduction gives the sense of guaranteed value. Both approaches work, but in different contexts.

4️⃣ Avoid Extreme Markdowns: Slashing prices too deeply can backfire. Discounts above 50–60% often create doubt about quality. Instead of excitement, customers start to wonder why the product is so cheap, and that suspicion reduces sales.

Why It Matters

Discounts are more than a price cut. They influence perception, mood, and buying behavior.

The Takeaway

Choose percentages for storewide deals and dollar amounts for single items. By matching the type of discount to the promotion, you can boost revenue while keeping customer trust intact.

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The Takeaway

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