The Paradox of price-selling leads to a reduction in Your Offer amount
The Psychology of Price-Sell Perception
A lot of companies believe that lowering prices will lead to an automatic increase in the number of customers. But that is often the reverse. The more the price rises, the more likely it is for customers to buy. People’s psychological makeup explains why they tend to hold back and anticipate better deals when prices or discounts increase. Consequently, instead of prompting customers to make immediate purchases, excessive discounts can motivate them to delay purchase
What is the mechanism behind the gradual reduction of discounts?
Taking advantage of this paradox requires structuring your discounts accordingly. Rather than gradually increasing the discount, begin with a high level and gradually decrease it. This technique exploits FOMO customers and entices them into making a purchase until the discount is released
If your product has a profit margin of 35%, your initial high-value offer could be as much as 30% off. Some customers may be hesitant at this point, anticipating a more favorable deal. Your next proposal should be reduced to a mere 10%. This creates a sense of urgency, as customers realize they may have missed out on the best deal and are afraid of losing even more. Their thoughts suggest that if they don’t act immediately, the next offer could be even more problematic or no offer at all. ”
Why Do Offers Help Customers Make Final Decisions?
Offering discounts in a structured way prevents customers from developing the habit of waiting indefinitely. If you repeatedly offer large discounts for extended periods, customers learn to expect them and delay their purchases. Instead, by gradually decreasing discounts, you reinforce the value of your offers. Customers begin to understand that your discounts are genuine and time-sensitive, making them more likely to buy at the earliest opportunity
Moreover, keeping customers in a state of uncertainty about future discounts is beneficial. If they always know when discounts will appear, they may wait for specific times, potentially turning to competitors in the meantime. Instead, a randomized discount structure keeps them engaged and surprised, increasing their likelihood of making a purchase on impulse
AR eal-World Example
For two years, we ran discount campaigns ranging from 10% to 50%, yet very few customers took advantage of them, even at the highest discount. Why? Because they kept waiting for something better. We identified two key issues:
The Winning Strategy We Implemented
To counteract this, we restructured our discount strategy based on customer behavior:
The results were remarkable:
The Key Takeaway
Modern sales strategies require businesses to stay ahead of customer psychology. You need to be Ten steps ahead In your pricing tactics to maintain engagement and drive conversions. Gradually decreasing discounts, rather than increasing them, can be a powerful tool to create urgency, prevent unnecessary waiting, and ultimately increase sales
By understanding and applying these principles, you can shape customer behavior in your favor and ensure the long-term success of your business