How we change what others think, feel, believe and do

Limit Per Customer

Disciplines > Marketing > Pricing > Limit Per Customer

Description | Example | Discussion | See also

Description

In selling one way to encourage customers is to limit the number of products that each customer can buy at a given price. This is a good way to extend the sale of heavily discounted items that may be used as loss-leaders to help draw customers in.

You can limit one per custom or several. Keep this number down (typically in lower single figures) to show that you really are limiting sales. You can also link this with the sale of other products or purchases over a given price. You may also say that you will allow customers to buy more, but only at the 'full price'.

Example

A retail store sets up a product as a loss leader that is promoted heavily in the sale literature and adverts. 'Only one per customer at this price' is touted. The store does not check if people come in several times for the same product. The people think they have outwitted the store, yet they end up buying more of other products too.

A car sales outlet has a single 'full custom' product on show at a good price. The sales person tells customers that this is the only one available. When they sell it, they get in another, with a different paint job but otherwise the same. Again, this is now a 'one-off'.

Discussion

Limits per customer sends a signal that you want to prevent a few people snapping up all the products. This has a number of reasons why people will be encouraged to buy:

• It makes you seem fair and equitable as you distribute the bargains amongst many customers.
• It makes the products seem a particularly good bargain as it suggests many people will want to buy many of them.
• It implies that there are relatively few products available, creating a scarcity effect.
• If more of the same product can be bought for the 'normal' price, this gives a contrastive comparison that makes the discount price seem even more of a bargain.
• It suggests that many people will want to buy, giving social proof that others desire the product.
• It implies that even with this constraint, the product will sell out soon.

See also

Loss-leader Pricing, Scarcity principle, Social Proof principle