Separate Your Discounts When Possible

Consider a $10 discount.

Marketers could show a discounted price:

Or they could supply coupons. In this case, customers would see current prices until they apply this discount in the checkout:

Would it matter? It’s still $10 off either way.

Turns out, yes. Coupons induce larger purchases (Jia et al., 2023).

With a coupon, customers browse products by fixating on the reduction — not the final price — and this pleasant sensation numbs the pain of a larger purchase. For discounts that are visibly shown, prices are already reduced without any wiggle room to reduce further. So customers prefer cheaper options.

How to Apply

• Give Coupons. All else equal, they're superior to visible discounts.
• Delay Showing Discounted Prices. Consider a 15% discount. Marketers will be tempted to apply this discount immediately in order to show the lowest price possible. But if customers are aware of this discount while browsing, wait until the checkout to show the final reduction. Let customers envision price flexibility while browsing.

• Jia, H., Huang, Y., Zhang, Q., Shi, Z., & Zhang, K. (2023). Final Price Neglect in Multi-Product Promotions: How Non-Integrated Price Reductions Promote Higher-Priced Products. Journal of Consumer Research, ucad045.