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he Psychology Behind Effective Promotional Pricing

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    Pricing isn’t only about covering manufacturing and production costs while getting a profit out of it. Companies, whether small or big, must master different pricing strategies. Pricing your products requires know-how regarding the psychological influence of pricing over customer behavior while driving sales. One of the most powerful pricing strategies is promotional pricing. It is a strategy that many brands use temporarily to reduce product or service prices with the intention of later attracting prospective customers.

    Therefore, with the use of promotional pricing campaigns, a company, for a short period of time, lowers the prices or adds additional value at the same price to get the attention of the customer. This acts as a strong marketing tactic for businesses to gain loyal customers while building awareness.

    In this blog, we will be discussing everything along with challenges that a business may encounter in promotional pricing. The blog will also discuss practical tips that can help the company create brand awareness and loyalty with the use of promotional pricing.

    Understanding Promotional Pricing

    Promotional pricing strategy helps businesses generate a quick increase in demand for their services and products. Therefore, in most cases, this strategy is beneficial for a limited period of time, creating urgency among the customers and creating an impression that they may miss out on many things if they don’t buy them soon.

    One can use promotional prices to create a boost in sales in their brand for a short period of time while generating repeated sales in the long run. This pricing method allows companies to temporarily reduce the price of a service or a product to drive quick sales. Promotional campaigns primarily support these discounts and deals.

    Promotional pricing is directly proportional to driving sales with a temporary reduction at the cost. People love offers, and if they see a 25% off sign, then they will feel like they can’t miss the opportunity or they will miss out on a good deal.

    The promotional pricing strategy can act as one of the best ways to create quick demand for a product. Therefore, companies can use promotional pricing to make a quick-fitting, effective strategy that will help them to implement sales and later on gain the trust of the customers.

    Pros and Cons of Promotional Pricing


    The pricing strategy may be a good fit for many businesses if it is done correctly. If someone constantly uses the promotional strategy when selling, then it may tarnish the brand value and image. However, it has a few advantages as well.

    Attracts new customers for the brand

    According to statistics, around 62% of customers will try out a new retail or online store during their holidays so that they can get a better price. And 44% of those new customers would try a new place because of discounts and coupons. Therefore, it is one of the biggest advantages for businesses that want to type promotional pricing to attract new customers. If a company wants to earn some new customers quickly, promotional selling will be the easiest way to do it.

    Retains Loyal Customer

    If promotional pricing is mitigated properly, then it will help you become a customer and increase customer loyalty. Customers get early access to sales, and then they will be more likely to become loyal customers. 

    Customers buy more 

    Promotional pricing is not only something that helps to attract new customers but will also help you serve your sustaining customers more. Therefore, if someone wants to sell their product, then offering a promotional period for customers provides them with a chance to refill it without having to pay the full price of the product. And about this, it is not only the customers but also the owner as they will be able to promote their new product, which customers may want to re-purchase later at the full price. The customer, at a fraction of the cost, tries something new, and this increases the number of repeated purchases.


    If a business is launching a new product, then adding it to the catalog for more exposure at a reduced price will help the business to make customers aware of the product. This strategy, over time, can be an essential part of the business to process a strong product launching plan. However, there are a few disadvantages when planning promotional periods.

    It may not help you retain new customers

    Promotional pricing may help you retain your already loyal customers, but it may not be the case for new customers. Promotional selling helps businesses to gain new customers in a short period of time. And there is no guarantee that one can keep them. Therefore, promotion selling is more like the customer is after a low price and impulse buys the lower priced product.

    Hurting brand image

    Most of the time, a low-cost product can indicate a low level of quality even if the business has the most sustainable and well-appointed manufacturers. Furthermore, it can also make the customer feel that the business is trying to get rid of the unsold stock, which is poorly made. If the business is excessively advertising low-priced products, then it can make the business look less prestigious. Hence, you must use this type of strategy only for certain products with caution and for a limited period of time.

    Tips to Successfully Implement Promotional Pricing

    Set Objectives

    Define what you want to achieve with your promotional strategy, whether it’s attracting new customers, increasing sales, or clearing out old inventory. And then proceed accordingly for best results.

    Choose the right product

    Select the items or services that will benefit you the most from a promotional pricing strategy. This could be new products to create awareness or slow-moving items to boost sales.

    Determine your strategy

    Decide on the discount or additional value you will be offering to the customers. Make sure it’s attractive enough to entice customers but still profitable for your business.

    Promotional period

    You will need to set a specific time frame for the promotion of your products. This creates urgency and encourages customers to make a purchase sooner rather than later.

    Monitor the performance

    You need to track the performance of your promotion to see if it’s achieving your objectives. Analyze sales data, customer feedback, and other metrics to gauge success.


    A promotional pricing strategy is a powerful tool that you can use for your businesses to attract new customers, retain loyal ones, and increase sales. However, you need to set clear objectives while choosing the right products, determining an attractive discount, and monitoring your promotional pricing performance to ensure success. While promotional pricing can help you generate quick demand, it’s crucial to use it judiciously to avoid damaging the brand’s image. By following these practical steps, businesses can leverage promotional pricing effectively to achieve their goals and build lasting customer relationships. Remember, it’s all about finding the balance between offering value to customers and maintaining the integrity of your brand. Pricing Intelligence solution by can also help you set up your product at the right prices by gaining an edge over the competition.



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