Promotional Pricing Strategy

A promotional pricing strategy is best at generating quick demand for products or services.

Promo pricing:

• Has tight time frames
• Creates a sense of urgency
• Gives the impression of missing out if customers don’t buy soon

This strategy can be used to:

• Boost short-term business sales
• Generate repeat long-term sales

So in this blog post, we will learn:

• What promotional pricing means
• Prominent examples of promotional pricing
• How to implement a successful promotional pricing strategy

Let’s dive right in.

What’s Promotional Pricing

Promotional pricing is a company temporarily reducing the price of a product or service to quickly drive sales.

These deals and discounts are marketed using promotional materials or dedicated campaigns.

Because people love offers, 25%-off a product can make it more noticeable and an opportunity not to be missed.

And giving people deals they can’t resist with promotional pricing that’s quick-hitting and effective should only be offered strategically and in doses.

As large-scale promotional pricing hurts profit margins with customers consistently expecting low prices.

When is a promotional pricing strategy needed?

If your company is going through a tough period, products or services are selling as much as you’d like.

Sales are slow and consumers are losing interest in your brand.

Your business could do with a new lease of life, which could be rebranding, reevaluating your messaging or restructuring your sales process.

But those wont work because you need a kick start, not a new identity.

So if you’re a retail or ecommerce business, you need quick demand and consumer interest with promotional pricing.

Promotional Pricing Pros

Promotional pricing is good for most businesses but in doses. 

Because constantly running these promotions will tarnish your brand image and undervalue your product.

The following are advantages of promotional pricing:

Attract new buyers to your brand

More than half of consumers try new stores or online retailers in the holidays because of better prices.

And rest, because of coupons or discounts.

Promotional pricing quickly attracts new customers to your business and is one of the best and easiest ways to do so.

Get current customers to buy more

Promotional pricing helps you sell more to your current customers.

Selling products that sell out like household products for a promotional period lets customers “refill” without paying the full price.

You can even get them to try new products at a discounted price that they might re-purchase later at full price.

Help retain loyal customers

Promotional pricing helps retain customers and increase customer loyalty.

More than half of loyal customers want early access to sales and new products.

So it’s better to offer promotional pricing to loyal customers first or risk them leaving for another brand for cheaper prices and more appreciation.

Get new products off the ground

When launching new products, increase exposure by selling it at a discount for a limited time.

Pairing strategies like promo pricing with product launches can work with any product and boost sales.

Like adding new subscription packages, new digital products or new items to your online store.

Promotional Pricing Cons

Promotional pricing has disadvantages to consider when planning your promotional selling period:

Doesn’t help retain new customers

Promotional pricing helps you retain loyal customers but not new ones promo periods.

Promo selling helps quickly earn new customers but it’s likely they’ll churn after the price returns to normal.

Because promotional pricing leads to impulse buying decisions, people don’t plan to buy anything but do so because of discounts or bulk prices.

Often leading to regret and returning the products.

So impulse buyers help meet short-term revenue goals, but don’t help in the long term.

Can hurt your brand image

Cheap products represent low quality, even if the product isn’t.

It also looks like you’re getting rid of unsold stock or poorly-made products.

Also advertising low prices make your brand look cheap, so use discount pricing with caution, for certain products and for a limited time only.

Examples of Promotional Pricing

• Flash Sales
• Buy One, Get One Free (BOGOF)
• Loyalty Programs
• Seasonal Sales

Flash Sales

Flash sales are when businesses give big discounts on products or services in a short time period.

Flash sale discounts generate quick demand and are an example of promotional pricing.

Buy One, Get One Free

The “buy one, get one free” deal is a popular example of promotional pricing and is advertised using coupons and codes.

These deals are popular because you get double value for the price you pay for one product.

Businesses use this strategy to offer a free product or service so people purchase another one.

The price of the product you buy in “buy one, get one free” is higher than the other, so you’re selling two products that are cheaper but not half-priced.

So select products with this strategy, that you can profit from at lower prices in higher volumes.

Loyalty Programs

Loyalty programs reward brand loyalty by offering deals and discounts for consistent and repeated purchases.

Getting new customers takes effort and is expensive compared to retaining customers.

So loyalty programs are smart and cheaper ways for businesses to generate revenue from dedicated consumers.

Examples include airlines frequent flyer miles and sandwich shops punch cards for free sandwiches.

These types of loyalty programs offer rewards in exchange for a number of visits.

The types of loyalty programs you offer depend on your business size, business nature and the intended outcome.

Seasonal Sales

Seasonal sales are extended flash sales and used to sell seasonal products like swimsuits in the summer or toys in the holidays.

These types of sales work for businesses that sell season-specific products or services.

Because this strategy is based on the relationship between product or service and the seasonal timing.

For example, promoting and selling winter coats in July will leave consumers confused, not interested.

Promotional Pricing Strategy

Find the right promotional pricing strategy for your business by following these steps:

Why?

Do you want to start a promotional pricing strategy to:

• Get attention for a new product or service
• Get customer traffic quickly as possible
• Sell extra inventory
• Reward customer loyalty

It’s important to understand what you want from your promotional pricing strategy before thinking about what works for your business.

So know what you want to accomplish before going into the specifics.

Plan

Next consider:

• Your promotional budget
• How your business operates
• If you’re in conventional retail
• If you sell online

For example, a small independent retail store selling excess inventory, needs a flash sale with billboards, flyers and storefront signs for advertising.

But a large ecommerce website wanting repeat business, needs a customer loyalty program and paid social media advertising for promotion.

In promotional pricing, what works for one company might not work for another so before deciding on your strategy, consider:

• Your business’s reputation
• Industry standards
• Brand identity
• Immediate needs
• Long-term goals
• Financial situation

Launch at the right time

Timing is important when deciding on a promotional pricing strategy like the duration of the promotion and time of year.

For example, customer loyalty programs last longer than two-day flash sales, so consider:

• Your time frame
• Your budget
• Your promotion pricing strategy intent

Also consider the dates you want to run promotional pricing programs because certain times of year are better for some strategies.

For example, flash sales are more popular on holiday weekends.

Prioritise current customers, not new ones

Promotional pricing can help and hurt current customer relationships.

For example, creating a promo selling period after high sale days is a slap in the face to customers who paid full price for your products.

So think about timing and rewarding current customers as well as attracting new ones.

This can be done by making discounts available to current customers first, then the public.

Just remember to use promotional pricing to retain and keep current customers happy before attracting new customers.

Promotion Cost

Make sure you offer your promo pricing to your customers first, then the public.

The following are the costs of advertising promo pricing:

• Email: Send emails to current customers and subscribers using a free email marketing tool but larger email list might incur costs
• Organic Social Media: Posting about promotional periods on your social media channels is free so set up a social media calendar to stay on schedule
• Paid Social Media: Social media ads promote to people searching for your brand and you only pay for clicks your ad receives so invest $50 then decide to continue or stop
• PPC: Pay-per-click advertising is low-cost attention for your promotional pricing period on channels like display and search. Invest at least $50 only paying per click

Promotional Pricing Tips

Use the following discount and offer details to make a good strategy, great:

Post old and new prices

Show how good your offer is by comparing the previous price and the new one clearly so people know how much they’re saving.

Note: Offer real discounts and be ethical. If not, people will notice, damaging your image.

Use percentages to talk about deals

Showing people they’re spending 20% less than usual, shows the deal puts money back in their pocket.

Use the same price for luxury products

Products with high prices are seen as higher quality, so don’t try to increase the demand by lowering the price.

Promotional pricing is for products that are affordable with the potential to be cheap.

Decrease discounts strategically

End promotional pricing by strategically decreasing discounts so people see opportunities until it goes back to the original price.

Conclusion

Now you know how to build a promotional pricing strategy.

Just remember to tailor your sales strategy to your industry by researching what worked for similar businesses.

It’s also important to offer content and customer service to reach the right audience and give a memorable buying experience.

So, try different strategies and figure out which pricing attracts consumers without hurting your profits.

Now it’s over to you.

Tell me how you use promotional pricing and how it’s benefitted your business?

Let me know in the comment section below.