Understand Your Buyer > How To Lose The Sale > Fake Discounting
What is it?
Fake Discounting occurs when you have a shop or brand that is ALWAYS being discounted – it’s nearly impossible to buy it at full price.
It also occurs when a discounted item has an advertised RRP that is much higher – but its maybe NEVER sold for that price, or in very low volume. (a bit like unrealistic discounting)
Why does it work?
It works because over time, the discounted price simply becomes the price.
This erodes not only the perceived value of your offering, but also means buyers will ONLY buy when there is a deal to be had which is a long term threat to profit.
Discounts and promotions are fine, but when you inflate a price to discount it back down, the longer term impacts can be considerable.
How can you use it?
If you want your buyers to second guess the true value of your offering and never pay full price again, then advertise your offering at a much higher price, but discount it to a more reasonable price for an extended (or perpetual) length of time.
In the UK we have furniture stores that do this – they advertise sofas that “were” £2000, but are now only £500 – but the offer ends Monday.
We know that on Tuesday another promotion will almost certainly begin, rendering the discount and the scarcity a complete fallacy which is designed to make buyers think they are getting a deal.