5 promotional pricing examples for increasing sales

Shopify merchants don’t need to shadow the retailer game book of running sale after sale. Instead, they’ve got an identity — propped by a backstory — to attract and retain customers.

We preach the above. A lot. So, it may sound like we’re averse to promotional pricing. 

Not so. Promotional pricing strategies are advantageous for stirring demand and boosting sales in the short term.

We’re just judicious in their use, as should every Shopify merchant walking the tightrope of staying true to itself while remaining profitable and maximizing customer lifetime value. 

Before we walk through five of the most common promotional pricing examples and our advice for employing them, let’s start with the pros and cons. Make sure to stick around for best practices for protecting your bottom line. 

The benefits of pricing promotions

Who doesn’t like to save money?

Some consumers get a rush from snagging a deal. Others depend on discount pricing to improve their money management. For the financially fraught, saving a buck is a necessity.

Stats speak to the impact of discounts, especially when inflation influences purchasing decisions. Shoppers seek greater bang for their buck, as 54% say saving money would influence them to change stores.

Economy woes aside, there are other reasons to embrace promotional pricing:

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• Rid your Shopify store of excess inventory. Products that sit around too long do no good. Moving them at a reduced profit could be a better alternative. Think “last chance on this low-stock inventory.” Flash sales — bargains pinned to a minimal timeframe, like just a few hours — are a fantastic route for drumming up urgency.  

• Launch a new product. An addition to your product lineup deserves extra attention, and a sales promo hits the spot. Drive extra excitement with a pre-sale event exclusive to subscribers, customers, or any segment of your audience. (PS: Seguno has a pre-built email campaign for a product or collection launch. Read our guide for creating awesome product launch emails and you're gold.)

• Reward customers. Showing appreciation to supporters should be a part of every Shopify merchant’s playbook. Extend a discount to a first-time buyer for their next purchase, for example, as part of a post-purchase email strategy. Or provide price breaks when loyalty program customers reach a milestone. (Good to know: 79% of consumers are more likely to support a brand because of its loyalty program.)

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• Drive brand awareness. We always encourage Shopify merchants to toot their horns on occasion. Promotional pricing can be the caveat before switching to what makes you different or simply saying, “Thanks for helping us live our dream.” A shop anniversary — or the shop owner’s birthday — is the perfect time for this approach.

The disadvantages of pricing promotions

Now for the cons. Or, let’s rephrase that: the possible downfalls of Shopify discounts.

• You put profitability at risk if you’re not strategic. Overly focus on revenue with too many promotional pricing strategies or haphazard planning, and you invite a business slump. McKinsey & Company outlines four questions for formulating a smart markdown strategy. 
• You may damage your average order value (AOV). You could be inadvertently training your audience to wait for the next sale rather than pay full price. And if a price cut was the catalyst for a new customer, they may likewise only bite when another rolls around or abandon your brand altogether.  
• You could sabotage your shop if you don’t build in protections. Let’s say that your margins limit how many deals you can provide. So, you create a discount code like CELEBRATE20 and send it to subscribers. That code is leaked on the internet for anyone to grab. (Hang tight — we’re exploring the intelligent approach to discount codes later.) 
• Your brand image might suffer. Frequent sales promotions or excessively slashed prices can convey low value. No one wants the perception of being subpar. 

As we’ve alluded to, avoid these downfalls by including safeguards. 
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5 promotional pricing strategies (with email examples)

You’ve identified a business goal. Next is selecting the best-aligned promotional pricing strategy. 

Five options typically surface: discount pricing, buy one get one free (BOGO), tiered discounting, bundling, and free shipping. 

Discount pricing

Discount pricing is the most popular promotional pricing example. It works for several goals, whether giving your store a lift or clearing inventory. It comes in one of two forms: 

• Dollar value discount; i.e., $10 off
• Percentage-based discount; i.e., 10% off

Studies show that a dollar value discount holds sway over a percentage-based one for higher-priced items. The research defines the cutoff as anything more than $100. 

For products under $100, the brain perceives a percentage off as a better deal than a dollar discount. 

Either way, our general advice is to limit discount sale events to select products or collections. Choose the higher-priced items to benefit your AOV. 

Some other tips: 

• State the end date to conjure a sense of urgency and ensure clarity; this tip goes for every promotional pricing strategy hereafter     
• Reserve sitewide discounts for special times of the year, such as the Black Friday Cyber Monday dash
• Emphasize the savings by showing the regular price (typically crossed out) positioned next to the price drop

Bonus tip: lead with the condition and follow with the reward when marketing your discount. For instance, phrase your promo “Spend $100 and get $10 off” rather than “Get $10 off when you spend $100.” Studies show that the “bad news” before the good resonates more.
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Buy one, get one free (BOGO)

Which is more appealing from a shopper's standpoint? 

• Buy two, get 50% off
• Buy one, get one free

Both result in paying the same price. However, straightforward BOGO phrasing (the second) sells better because of the psychological pricing strategy of innumeracy. Put simply, humans avoid math. BOGO is a lot simpler to grasp than the alternative.

The BOGO standby is appropriate for some, but not all, products. Don’t apply it to luxe products and those with small margins. 

Some other tips: 

• Don’t presume everyone knows the BOGO acronym, so communicate what the deal entails. BOGO of equal or lesser value is the standard language. 
• If BOGO is too much to recoup, “buy one, get one ½ off” may be palatable. Or B3G1. You get the idea. 
• Feature product photos or illustrations to reinforce that the shopper gets more for the same amount. 

One word of caution: careless parameters can undervalue your products. You don’t want to trigger thoughts like, “They make so many of these that they’re giving them away."
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Grab attention for your promotional pricing strategy in the inbox with a stellar subject line.

Tiered discounting

Unlike discounting and BOGO strategies, the “buy more, save more” approach of tiered discounting aims to raise your AOV. 

The greater the cart value, the greater the savings. Here’s where merchants can make a case for both cross-selling and upselling. 

The premise is that shoppers lose out if their spending level falls below a threshold. If you only need to spend another $5 to receive $20 worth of free products, why not keep shopping? So the thinking goes. 

Tiers that work in your favor require some math. Start with a minimum purchase discount strategy. Calculate your AOV over the last few months. Add 10% to 20% to determine your first threshold, then add subsequent tiers. 

Ecommerce guru Nik Sharma demonstrates how this could play out:

Use Seguno’s Dynamic Banner Suite to create discount tiers and automatically apply them to shopping carts.

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Bundling

The bundling promotional pricing example involves packaging complementary products and selling them at a reduced price. Enter cross-selling and another shot at raising AOV. 

Customers benefit in other ways aside from cost savings. Bundling can: 

• Introduce products they may not have considered or are unwilling to pay the regular price
• Provide convenience with an all-in-one solution 
• Expand understanding of how to use the product(s)

Some businesses favor the pure bundling concept, in which there is no other way but to buy the products as a unit. But we like the idea of mixed bundling — making all components available for individual purchase. After all, mixed bundling is promotional pricing, by definition. 

Our tips: 

• Demonstrate that the consumer is getting more for their money by displaying the price cut versus the tally of individually priced products
• Show what's inside the bundle; visuals speak volumes

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Free shipping 

Baymard Institute research shows that the average cart abandonment rate hovers around 70%. In other words, only three of 10 shoppers who add items to an online cart proceed with a purchase. 

Shipping costs are a significant culprit behind shoppers jumping ship. Per the Baymard Institute, 48% of consumers abandon a cart during online checkout because the extra costs — shipping, taxes and fees — are too high. 

We know that most Shopify merchants can’t absorb customers’ shipping costs. And since 58% of consumers will add items to their cart to qualify for free shipping, set a minimum purchase requirement to meet them halfway. 

Make sure the threshold isn’t an arbitrary number infringing on profits. Once again, do the calculations. 

Pick your promotional pricing strategy and build in protections with Seguno

Making progress in ecommerce calls for occasional promotional pricing. Executed without forethought, discount pricing or other tactics can quickly lead to disaster.

After you define your goal and choose a promotional pricing example that fits, add safeguards to protect your margins. We mentioned some options throughout this post, the primary one being setting minimum spending thresholds. You could also limit your discount to a higher-priced product or collection.

Don’t feel pressured to open up a sale to everyone, either. It’s not always feasible. Market to your email and/or SMS subscribers, or reward VIPs who buy frequently. 

Assure control over the discount by providing unique coupon codes. Individualized alphanumeric sequences are better than a generic promo code, like SALE15, that anyone can access. 

Seguno’s Email Marketing enables you to create unique Shopify discount codes automatically. Likewise, our Bulk Discount Code Bot generates unique codes you can upload to any email marketing provider or another marketing channel.
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Otherwise, resist seeing promotional pricing strategies in revenue terms alone. That’s short-sighted thinking. View it as one resource for attaining a healthy bottom line over the long haul.