What are Price Discounts?
Price discounts are pre-determined deductions on a product or a service price. These discounts are applied to a product before the taxes are calculated, further ensuring a tax deduction. There are several types of discounts, such as product launch rebates, first-time order discounts, festive discounts, subscription discounts and more.
Significance of Price Discounts in an E-commerce Shipping and Delivery
Price discounts ideally allow a seller to acquire more customers in a competitive industry, while in some cases, it also decreases a forecasted loss due to excess inventory.
- More orders: Sellers who display the listed product price before adding the discount have often witnessed a sharp spike in their sales. Furthermore, price discounts also allow a seller to add a sense of urgency by introducing limited-time product discounts during specific festivals.
- Stock clearance: Price discounts are often used to attract customers and gain huge order spikes, which allows these brands to remove their old stock in record time.
Prerequisites of Price Discounts and How It Works
The prerequisites vary per brand for specific types of price discounts. However, the typical requirement is to ensure that the profit margin for a product is maintained after a price discount is introduced.
After a discount has been decided, it is used in the mentioned ways.
- Marketing the discount: The product’s listed price is marketed along with the discount coupon or code.
- Order calculation: Once customers have selected the product and received the discount promo code, they must enter it on the payments page. Once done, the discounted price is displayed and paid by the customer.
Use Case with Price Discounts
A buyer in Australia wanted to buy a new white sneaker online. After some research, they found two brands selling identical white sneakers for AUD90. However, brand A was offering a 20% discount, while the other brand B was selling at the printed price. Therefore, the buyer opted to buy the pair of jeans from brand A at a discounted price.