When to discount using $ vs. %

 

The Rule of 100 will change how you discount forever.

Here’s how it works.

For discounts on products that are less than $100, promote your discount as a percentage off.

• For example, if your product is $20, promote 25% off rather than $5 off.

For discounts on products above $100, use the dollar amount rather than the percentage.

• So, if your product is $1000, it’s better to say they get $250 off rather than 25%.

The rule of 100 works thanks to how we perceive numbers.

At lower value products, the dollar discount, say $5 off $20 seems more trivial than 25%.

But for more expensive products, the dollar discount, like $250, seems significant and we can imagine how good that would be to get.

Effectively, once your discounted dollar amount gets to double digits (i.e greater than $10), that’s when you should switch from percentage to dollar values.

Learn more about how to maximise the impact of discounts in Just Do This, my small business program.

 

Ref: Shih-Fen S Chen, Kent B Monroe, Yung-Chien Lou, The effects of framing price promotion messages on consumers' perceptions and purchase intentions, Journal of Retailing, Volume 74, Issue 3,1998, Pages 353-372, ISSN 0022-4359