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Ask HN: Best practices around discount offers?

3 pointssnoonan12y ago8 comments

We have a lot of choices when deciding when to offer discounts as incentives for our free users to upgrade to a paid product. We have had very impressive results from our discount campaigns in the past, so we know it works well, at least in our case! The problem is that we don't REALLY know if we're leaving a lot of money on the table and just doing it completely wrong. Valid testing is hard because we have a small number of buyers paying a relative high price.

Should we send them when sales are slow? Should we send them when sales peak, reducing friction among people CLOSE to buying already? Should we just work on modeling behavior and offer them on a case-by-case basis?

Do any best practices exist around this?

8 comments

5 comments · 2 top-level

scottishguru12y ago· 2 in thread

There should be no need to hold a sale. In the long to medium term, reducing prices has never been the answer. By this stage you should've already worked out where you are in the market and what your optimum price point is.

You should focus on providing the very best service possible and work out, from your customers' perspective, how you can add value to your product.

Once you've done this you'll be surprised at how less important a factor the price become to new customers. Also, these new customers will stay with you longer as they aren't fickle about price and so won't jump ship as soon as something a few pennies cheaper comes along.

Feel free to drop me an email for a chat: fortitude3141@gmail.com

snoonanOP12y ago

Thanks! We have 5 years of sales on this mature product and know the space well. It surprised us that the discount offers were effective since we had a handle on when people buy after first visiting, etc. The push made by the discount offer really does make more people buy and overall increases our net profit.

It's a one-time purchase. We raised prices by 50% two years ago and saw a big jump in revenue. We could probably go up another 25% to the next price point and still do about the same.

While this advice is very good and it's what we try to do, the original data still show offering the discount makes us more money. Maximizing the timing of the discount offer is still worthy goal. I hope that sounds like a fair point.

scottishguru12y ago

I should've added the caveat that I was speaking 'generally', so apologies.

I am interested to know... What percentage of your sales are at a discounted rate? Are there spikes in volume centred around discount periods?

jmedwards12y ago· 1 in thread

What do you define as an 'impressive result': increased unit sales? Are you signing up people who absolutely would not have signed up over time? Are you looking at number of sales and signups only, or are you also considering your margins?

> Should we send them when sales are slow? Should we send them when sales peak, reducing friction among people CLOSE to buying already? Should we just work on modeling behavior and offer them on a case-by-case basis?

Why don't you flip the question around: Everything has a value and a price. I assume in this case these customers would buy eventually. What is that 'eventually' and what price are you wiling to bring forward those sales and have that money sooner rather than later?

snoonanOP12y ago

Fair questions! increased unit sales and we're up over 20% in total revenue for the same period last year. We did our first back in March where we were actually declining year over year for this product. So we're confident to say it's a long term good play.

On your second point, there is some time element to the buyer's calculus, we think. We're in the language learning space and people tend to trail off of their initial momentum after a few months. We think this translates to lost sales, which is why the extra push seems to really make a difference. To say we would get the same result from offering the lower price all the time may not be a fair statement given the fear and discomfort around making the choice to buy or not to buy.

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