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Absolute Discount

 

DisciplinesMarketing > Pricing > Absolute Discount

Description | Example | Discussion | See also

 

Description

In a sale, one way of displaying prices is to show a discount in absolute terms. In other words, show the actual new price rather than showing it as a percentage discount.

Show the old price as well, with this crossed out. Words may also be used, such as 'Reduced from XX to NN', or 'Massive reduction to NN'. You can also do the calculation for them, showing how much they will be saving, provided this is a significant amount.

Example

A shop shows the items with the biggest discounts in its window, then places them at the back of the store. In between are items with less discounts but which are still attractive.

A store knows price points for its customers, for example where anything under $100 will sell far more than items over $100. It holds an 'under $100 sale' of goods which have been over $100 are brought below this psychological barrier.

Discussion

Using an absolute discount rather than a percentage discount gives you much more flexibility in the reductions you offer.

Discounts are harder to calculate, so many customers will not easily be able to compare your reductions to others who have a percentage-based sale. 

Absolute numbers can take advantage of boundaries, where customers will behave differently either side of the boundary and other psychological effects such as preferred number pricing.

See also

Percentage Discount, First Digit Anchoring, The 99 Effect, Preferred Number Pricing

 

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