Five key Methods for Offering Promotional Prices

There are various methods to draw in customers with promotional offers. But what is best for you and your business?

There are 5 predominant methods that are used in various situations and they must be considered carefully before going out and simply offering a 20% discount.

Loss Leaders

With some risk involved, long-term rewards can be plentiful. By offering a product for sale at a loss, more customers will be drawn in to get the discounted item. This is a useful method where more offerings can be made once the individual has reached the point of sale and profit can be made when they are drawn to another product.

An example of this that occurs on a daily basis is in printers. A company like Brother can afford to sell printers at such a low price because a lifetime of ink to fill that printer will return a profit for them.


We have all seen seasonal sales. At the moment in Australia, the ‘end of summer sale’ is an extremely common occurrence in most retail shops. This serves the purpose of drawing in customers and also clearing outdated stock to make room for new shipments.

There are plenty of stores that constantly have some sort of sale. This can be a means of selling cheaper products without them appearing as a lower quality when a company can still make a profit when selling them at such a low price.

Cash Rebates

These promotional offers come in the form of cash back offers and items like coupons. The benefit of coupons is that not all are distributed are used and that another product is usually required to activate the coupon offer. Cash rebates have a much higher rate of use so must be carefully calculated to avoid operating at too much of a loss.

Reduced Interest

A competitive factor in the market now is the offer of improved finance deals in the market of larger, expensive items.
A common example I frequently see is Harvey Norman’s (furniture and electrical goods store) ’24-month interest-free’. This is a strong incentive to buy the product now, knowing they have 2 years before the product will cost them more than the actual set price as a result of paying interest on the loan.

Psychological Pricing

By reducing the product by a matter of cents or dollars, the psychological reduction can seem significant. $29,990 seems far cheaper than a $30,000 car purely because of the psychological barrier of the increase in that thousand columns. In reality, you are only saving enough to get 24 McNuggets, which in the vehicle market, is next to nothing.

This has also become a more important factor as a result of the internet which will be explained in the next blog.


Hooley, G, Piercy, N, Nicoulaud, B & Rudd, J 2017, Marketing Strategy & Competitive Positioning, 6th Ed., Pearson, Harlow, UK.


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