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Discount Pricing Strategy Explained | Unleashed Software

A pricing strategy is an important element of a lucrative business. More than any other element, a pricing strategy directly impacts the amount of profit you make. Choose a pricing strategy that helps you meet your sales objectives, enhances your brand perception and provides the best profit point for market demand. A discount pricing strategy is useful for driving traffic and sales short term, however used as a long-term strategy, discount pricing has some negative effects on market position and brand loyalty.

Pricing Strategies

Generally, a business must develop a pricing strategy for a product after performing a marketing analysis. Product distribution, positioning and promotional decisions are made and demand is estimated. A pricing strategy is formulated taking into consideration factors of cost, competition and profit objectives. Possible pricing strategies include a full price strategy, competitive pricing, discount pricing or a mix of these. We will focus on discounting pricing strategies for this article.

Discount Pricing Strategy

Businesses use discount pricing to sell low-priced products in high volumes. With this strategy, it is important to decrease costs and stay competitive. Large retailers are able to demand price discounts from suppliers and make a discount pricing strategy effective as they buy in bulk. It is usually impossible to compete with these retailers based solely on a discount pricing strategy.

Proceed with discount pricing strategies cautiously. Occasional discounts and discounts that reward loyal customers are effective. Discounts used too often begin a downward pricing spiral that may eventually damage your ability to sell the product at full price. For example, if a retailer has periodic large discounts then it may condition your market to wait for these sales, lowering profit margins.

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Discount Pricing Strategy Explained – Unleashed Software.

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