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Promotional Pricing

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    The price of a product influences a customer’s interest and attitude towards making a purchase. Companies regularly use promotional prices and discounts to attract customers to buy their products and create brand awareness. You should have an understanding of how promotional pricing works. It can help you develop a promotional plan for your company that boosts income and short-term sales. In this post, we will explore what promotional pricing is, its advantages and disadvantages, and its types with examples.

    What is promotional pricing?

    Promotional pricing is a strategy where a brand temporarily lowers the price of a product to lure customers. By reducing the price for a limited time, a brand has tried to sell its products by creating a sense of rarity. Promotional pricing can help businesses attract budget-conscious people to make a purchase. It can boost sales, create customer loyalty, and improve temporary cash flow.

    When used excessively, it loses brands money by reducing profit margins. Customers get used to lower prices, or they come only during the promotional time. This is known as price orientation.

    What are the advantages of promotional pricing?

    Encourages purchasing behavior: When you offer a limited time window, it creates a sense of urgency. As a result, people feel the need to buy your products for fear of missing out.

    Attracts fresh customers: Promotions are the most effective strategy to attract new customers. Customers are encouraged to experiment with new products since there are no price constraints.

    Competitive advantage: A brand can gain a competitive advantage by offering low costs. When given the option, most buyers will always choose a lower price for a comparable product.

    Clears inventory: Promotions are an excellent method to sell old products. If the outdated product is not sold within a certain period of time, it may need to be destroyed, resulting in a revenue loss.

    Increases client loyalty: Businesses that give special discounts to repeat customers are more likely to have a high retention rate.

    New product publicity: Promotions appeal to both new and returning customers. If newly launched products are promoted, they will soon gain popularity.

    What are the disadvantages of promotional pricing?

    Promotional pricing is a pricing strategy. If not executed carefully, the strategy might have a negative impact on customer relations and may result in loss of business. Here are some disadvantages of promotional pricing.

    Changes pricing views: If customers are offered deals on a frequent basis, they may believe that product prices are genuinely low, and they will understand that promotions are meant to persuade them to purchase.

    Affects brand loyalty: Returning customers may feel deceived if the brand discontinues regular offers. They may move to a different brand or wait till the company offers a promotion. Promotional pricing is not illegal; however, using promotional prices to mislead customers can be illegal and can cause them to take legal action. Hackers can also make phishing attacks disguised as advertising.

    Audience misunderstandings: Consider a brand whose target audience is high-income consumers. If that brand begins to give discounts, buyers may think it is servicing low-income individuals. Consequently, the brand image is hindered.

    Price above quality strategy: A brand that conducts frequent promotions may be seen as low-quality. Customers will not appreciate the brand’s quality, although it offers frequent discounts.

    Promotion Cost: In order for promotions to be effective, businesses must market them. People will not purchase the product if they do not learn about the promotion.

    Practical Tips: What are the types of promotional pricing?

    Businesses use a variety of strategies to attract customers. There are various types of promotions. Companies choose one, two, or more promotions based on their marketing approach. Here are several types of promotional pricing:

    1. Discount 

    A company puts a discount on its product when it wants to cut a specific percentage of the product’s regular price. The goal of the price discount is to generate demand by lowering the price. The intended customer segment is price-conscious. Price reductions are also made to clear stock during specific seasons to encourage purchasing. Discounts can be offered for any product and are used by the corporation when demand is highly elastic. The lower the price, the greater the demand.

    2. Coupons

    Companies often distribute coupons through newspapers or publications. In some circumstances, companies utilize their own products to offer coupons. For example, Thumbs-up and Pepsi give out coupons in their soft drink bottles. Coupons are normally found on the back of the label or below the cap. To redeem the voucher, the buyer must purchase the product, ensuring sales.

    3. Buy one, get one free

    The goal behind ‘buy one, get one free’ is to encourage the buyer to purchase two things at once. Customers will always purchase items with free things. This will increase sales while also providing him with a better price. Both the seller and the buyer benefit from this transaction. Companies often use this technique to attract clients and boost sales. This boosts not only sales but also the product’s market share. Companies also keep discounts, such as buying to receive a 50% discount on the overall price.

    4. Loyalty cards

    Many businesses use loyalty cards to offer discounts and prizes. Customers need loyalty cards to receive a discount. Companies encourage them to purchase products, usually at a discount or with additional features, and offer them those cards. Customers then have to redeem their cards and get discounts on products they purchase next time. This strategy makes them come back to a particular brand, which can increase revenue. The more points they have, the better they get a chance of receiving a discount. 

    5. Seasonal sales

    Seasonal sales are known as extended flash sales. They are often out in festive seasons to move items during specified times of the year. For example, a Diwali or New Year’s sale. The seasonal sale could also be called a summer sale, where they can sell swimsuits, goggles, and cabs, or a winter sale, where they can sell winter goods such as sweaters, jackets, and long overcoats.


    Price promotion is an effective approach for a company to promote its products and generate short-term benefits. It is used in many situations to achieve goals such as boosting client loyalty, expanding the existing customer base, growing sales or market share in a short period of time, and other similar tactics.

    It is essential to note that price promotion is a time-limited practice that cannot be used continuously. The attention that price promotion attracts is due to the time aspect. If it is used continuously, it may mislead customers, reduce revenue and loyal customers, and cause business loss. Head over to for cutting-edge pricing solutions!



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