Your marketing team pushes for deeper discounts. How do you protect your E-commerce store's profit margins?

Before doing deeper discounts, it's vital to ensure you understand what impacts the discounts you're already running actually have. We use AI to do this, and the process often leads to the fact that there's different segments of customers that want different kinds of incentives. Where the customer is in the buying journey is also very important. As opposed to "deep" discounts up front, often times creating a bundled offer where the discount is present is more effective.

Understand where the discount money is going first. > For instance, you could have unique codes in affiliate marketing to build new customer base. >You could discount a brand/product that has been sitting on the shelf and eating logistics cost. > You could discount on higher cart value to increase AOV. > You could offer discounts on clever product bundles. > You could also run limited period discounts. Bottom line, discounts need not be bad if you know how to use them. And just because you COULD does not mean you SHOULD. Allow logic & data to drive these decisions.

Becoming dependent on discounts is a huge problem for a lot of stores. It destroys margin and makes your brand seem cheaper. If you're going to offer a discount you need a reason. Customer loyalty, a seasonal discount. Don't just throw discounts around randomly.

A discount can only convince someone to buy something they want. Not something they don't want. Brands that rely on discounts and coupons to drive sales think that price is the issue. The real reason why people aren't buying is because they lack Conviction. They still need more Desire and Trust to pass the Conviction Threshold.

Of course, a marketing campaign may focus on a single product, but it should still fit into a long-term marketing strategy and have a connection with pricing across the entire product list. If you can estimate how much a new customer costs you, then the question of free gifts, for example, won't look so unprofitable. And you can afford to evaluate the effectiveness of marketing over long distances, rather than at the level of a single sale.

People like buying more expenssive things. It's couter intutitve,but if you can positino your brand as more premium, then people will actually wan to buy it more, not less. You want that "OMG XYZ is so so good, it's just so expensive or I would buy it every week!" That's the type of energy big brands have. hit hard on what makes you unique and the problem you solve and why not other brand can solve it like you.

Team needs to define the real objective of discounts, because recently e-commerce customers became smarter and more educated due to the rise of e and q commerce. MSRP and discounts aren't anymore the value customers are seeking, in stead customer became more attracted to reliability, quality, speed of delivery, and then price . When it comes to buying decision, customers are more likely to base their buying decisions on value for money than just going cheap. Price competitiveness vs other competition and offline market here are the two key components for pricing, discounts, and profitability.

Sometimes, you need to get creative to keep profits in check while offering discounts. Here's how dynamic pricing can help: Raise prices when demand is high: Slightly increase prices on in-demand items, like a hot new gadget during the holidays, to balance discounts. Monitor competitors: If competitors are charging more, adjust your prices too, so you’re not missing out on profits. Offer discounts during slow times: Give discounts during slower periods and keep prices higher when demand is up. Tailor prices to customers: Loyal customers might not mind a small price increase, so adjust prices based on who’s shopping.

Dynamic pricing adjusts prices based on market demand, competition, and other factors. Using software to adjust prices in real time can protect your profit margins. For example, if a particular item is in high demand, the price can increase slightly, offsetting discounts on other products. This ensures you're not leaving money on the table and that your discounts are strategic rather than across the board.

Implemente precificação dinâmica para ajustar preços conforme a demanda. Use software para aumentar preços em itens de alta demanda, compensando descontos em outros produtos e protegendo as margens de lucro.

During my time managing e-commerce businesses, I’ve used real-time data to adjust prices based on factors like demand, competitor pricing, and inventory levels. This approach allows me to offer discounts where needed without sacrificing overall profitability. Dynamic pricing helps strike a balance, maximizing revenue on high-demand items while still being flexible with pricing when needed, ensuring that discounts are targeted and margins stay intact.

Cost analysis is key to understanding the impact of discounts on your margins. Consider all costs, from acquisition to shipping, to determine the best price you can offer based on the scalability of the bottom line. Small operational adjustments can often reduce costs, enabling competitive pricing while maintaining profitability.

To protect profit margins while considering deeper discounts, we rely on a detailed retail pricing model that clearly shows the financial impact of each discount. It's eye-opening to see how the numbers reveal the true picture, moving the discussion from abstract ideas to concrete financial consequences. This transparency ensures the entire team understands how discounting affects profitability, leading to informed decisions.

If marketing threatens marginality, it means things are not going in the right direction. If during each campaign you set limits on the size of the discount based on the pricing for a given item, then you don't have an overall marketing strategy. Start from the beginning and add marketing to your pricing. The marketing budget can, for example, make up 25% of the total price and be dynamically distributed/ change its share/ across the entire list of products.

Price is easily the highest leverage lever you can pull in your business. Split test it rigorously. Don't just slap a random price on there, constantly test price. Specifically focus on making the price as high as humanly possible. It's much easier to raise prices than ti is to reduce costs.

Perform a thorough cost analysis to understand the impact of discounts on your margins. Factor in all costs associated with selling a product, including acquisition, shipping, and handling. This will help you determine the lowest price you can offer without incurring a loss. Sometimes, small adjustments to your operations or supply chain can reduce costs and allow for competitive pricing without sacrificing profitability.

Customer segmentation involves categorizing your customers based on their shopping behaviour and preferences by tailoring discounts to specific segments it can be more effective than store-wide sales. For example:- Offer discounts to first-time buyers to encourage them to make a purchase or to loyal customers as part of a rewards program because this targeted approach ensures that discounts are given to those most likely to be influenced by them, optimizing their impact on sales and margins.

A small segment of your customers will be wealthier and spend more than other. They will likely buy more frequently too. Figure out where these customers are coming from and tyr to get more of them. Talk to them, figure out where they hang out and then blast than type of content (tik tok, instagram, FB, etc).

Aplique descontos a segmentos específicos, como novos clientes ou clientes fiéis, em vez de fazer promoções em toda a loja. Isso otimiza o impacto dos descontos, direcionando-os a quem é mais influenciado por eles.

Protecting profit margins while offering discounts becomes easier with smart customer segmentation. In my work at YittBox, I’ve used segmentation to target specific groups with personalized offers instead of applying broad discounts across the board. By analyzing customer data, we can identify high-value segments or repeat buyers who are more likely to convert with smaller incentives.

We can look at two more user cohorts: 1. Ones who have purchased from your category but never from your brand 2. Ones who purchased once from your brand, never went for a repurchase from your brand but have been interacting with other brands In the first case, a comparison of competition offerings, price points, ratings and feedback would be critical in understanding if there’s a disparity here and plan actionables to bridge the same. If not, then targeting these users with customised offers should be looked at. In the second case, a deep dive on the feedback shared by these users about their experience should be looked at first. These practices would not only keep margins in check but also improve the gaps in the brand’s offerings.

In the competitive e-commerce market, deeper discounts can drive sales, but protecting profit margins is crucial. Start by analyzing data on past sales and customer behavior to identify products that can handle price cuts or need clearing. Build a strong value proposition to make discounts less necessary and conduct a cost analysis to gauge the impact on margins. Implement dynamic pricing to adjust prices based on market demand and keep an eye on competitors to tailor your strategies effectively. This approach ensures competitive discounts without compromising profitability.

I think that one should keep an eye on competitors' pricing and discount strategies to understand the competitive landscape and consider how to differentiate your products or services. Also, we can highlight superior quality, customer service, or other value-added features to justify a higher price point.

Acompanhe as estratégias de preços dos concorrentes sem entrar em guerras de preços. Diferencie-se pela qualidade, atendimento e valor agregado, em vez de igualar descontos, para justificar preços mais altos e proteger as margens.

Ignore the competition. Most of your customer probably don't even know they exist. Definitely don't compare yourself to them. Only time you need to look at competitors if they create a feature that improves the product significantly in a way you could do as well.

Competing on price alone is a race to the bottom. Instead, use competitor insights to refine your value proposition—emphasizing quality and service, and setting your brand apart without sacrificing profitability.