We should all try to avoid doing a discount promotion. I know I have to. However, with a pressure to increase a short term gain, we all need to do discounting. As it doesn’t require much of a brain work, let add some intelligence behind it. There are 2 ways to do discounting – absolute (or numerical) discounts or relative (or percentage) discounts. Which way is working better than which? The rule of 100 is your answer.
Researchers find that whether a discount seems larger as money or percentage off depends on the original price.
- If the prices are lower than $100, the percentage discounts (e.g. 10% off) will seem larger.
- If the prices are higher than $100, the numerical discounts (e.g. $100 off) will seem larger.
Let’s try this rule in your next promotion.