Day 713 - Do discounts devalue your product? - https://golifelog.com/posts/do-discounts-devalue-your-product-1670983866162
I asked a [question on Twitter](https://twitter.com/jasonleowsg/status/1601215575828492298) about the pros and cons of discounts, and learned so much from everyone:
> "Discounts devalue your product, erodes trust." - True, or false?
>
> When would discounts be okay?
> When would it devalue/erode?
Here's me summarizing and trying to do justice to everyone's contributions:
### When discounts devalue your product
- When it's perpetually on discount (e.g. Udemy). People come to expect the discounted price as the true price, and no one would want to pay full price anymore. It also erodes trust as customers catch on that it's just a form of sales manipulation.
- Offering one simply because someone asked. This gives customers the impression that it's actually worth less.
- When the quantum for the discount is too high, e.g. 80%. Again, it hints at customers that the true value is lower for you to be willing to sell it at that price.
### When discounts are okay, or even beneficial, increase value/trust
- For purchase power parity. That's a discount that might in fact increase trust because it show you're being considerate to people in lower purchase power locales. Kindness is always good for biz.
- Timing and frequency matters. When it's occasional, or for celebratory occasions, like Black Friday, product/company anniversary, or to celebrate achieving a milestone of X number of users. People are more open to it and less chance existing customers will feel it's unfair since it's to 'celebrate' an occasional occasion. Maybe 5 or less per year might be a good rule of thumb.
- Discounts are often given only to new customers, and leave the existing customers out of the picture, which is a wasted opportunity to build more loyalty. So also give existing loyal customers something special, like beta access to some hot new feature or also a discount for subscriptions.
- When it's aligned to your brand, product, positioning, pricing, business model, market, price sensitivity of your customers, etc (e.g. "no discounts ever" Apple vs "always on discount" Udemy)
- When it's for a certain type of product among different products of one business, e.g. lead magnets. Any price point to acquire a customers at, is better than $0.
- When planning a price increase, give a discount for a week/month to anyone to get it at the last price. Be open and honest about the price rise, and the discount you can give right now. This move doesn't erode trust but increase it, because it shows you care for customers.
- Give a discount when upselling/cross-selling. When your customer buys a product, they get recommended related products at a discount. Or even cross-bundling discounts with other creators!
*What other situations would discounts be okay vs devaluing?*
> "Discounts devalue your product, erodes trust." - True, or false?
>
> When would discounts be okay?
> When would it devalue/erode?
Here's me summarizing and trying to do justice to everyone's contributions:
### When discounts devalue your product
- When it's perpetually on discount (e.g. Udemy). People come to expect the discounted price as the true price, and no one would want to pay full price anymore. It also erodes trust as customers catch on that it's just a form of sales manipulation.
- Offering one simply because someone asked. This gives customers the impression that it's actually worth less.
- When the quantum for the discount is too high, e.g. 80%. Again, it hints at customers that the true value is lower for you to be willing to sell it at that price.
### When discounts are okay, or even beneficial, increase value/trust
- For purchase power parity. That's a discount that might in fact increase trust because it show you're being considerate to people in lower purchase power locales. Kindness is always good for biz.
- Timing and frequency matters. When it's occasional, or for celebratory occasions, like Black Friday, product/company anniversary, or to celebrate achieving a milestone of X number of users. People are more open to it and less chance existing customers will feel it's unfair since it's to 'celebrate' an occasional occasion. Maybe 5 or less per year might be a good rule of thumb.
- Discounts are often given only to new customers, and leave the existing customers out of the picture, which is a wasted opportunity to build more loyalty. So also give existing loyal customers something special, like beta access to some hot new feature or also a discount for subscriptions.
- When it's aligned to your brand, product, positioning, pricing, business model, market, price sensitivity of your customers, etc (e.g. "no discounts ever" Apple vs "always on discount" Udemy)
- When it's for a certain type of product among different products of one business, e.g. lead magnets. Any price point to acquire a customers at, is better than $0.
- When planning a price increase, give a discount for a week/month to anyone to get it at the last price. Be open and honest about the price rise, and the discount you can give right now. This move doesn't erode trust but increase it, because it shows you care for customers.
- Give a discount when upselling/cross-selling. When your customer buys a product, they get recommended related products at a discount. Or even cross-bundling discounts with other creators!
*What other situations would discounts be okay vs devaluing?*