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A good deal is hard to resist, and just about impossible to pass up when it’s for something you really want. While most businesses harness the power of deals and discounts to reel in more clients, there are many different kinds of discounts, and they are all effective with different groups of people.

Have you ever wondered why some deals and discounts work way better than others? Exactly what mind tricks do they play on us? Here’s everything you need to know, along with a handy guide to applying these tools to your business.

The Psychology Behind Deals and Discounts

1. The Consequence of Urgency
2. Different Types of Deals and Discounts
3. Using Language to Upsell on Deals and Discounts
4. Where Deals and Discounts Go Bad
5. A Balanced Strategy

Pinterst graphic for the article the psychology behind deals and discounts from Selz the ecommerce platform for growing businesses

1. The Consequence of Urgency

Deals and discounts work on one main principle: urgency. If you fail to act upon this opportunity now, you will have missed your chance to save money, get free shipping, or get something extra. Alternately: if you don’t buy it now, you will end up spending more money later. If you buy this thing now, you’ll get this other thing too, but only for as long as we have them in stock.

No one wants to spend more money later, or not be able to get something for free when they could have. By taking advantage of your customers’ normal, healthy attitudes towards pain and pleasure, you can persuade them to complete purchases.

2. Different Types of Deals and Discounts

As stated earlier, there are different kinds of deals and discounts. Dealwiki has spotted the benefits of discounts and has gathered many discounts on their website, so users can easily find them.

However, some discounts are more effective. Some discounts give free products when customers buy a certain number of items. Others offer free shipping or a certain percentage off. Some discounts are more effective than others. Here are some examples:

  • Imagine a deal where you can either offer 50% more of the product or cut 33% off the price. Either way, you will make the same profit. In this situation, most consumers would prefer to get 50% more of the product.
  • If you have two deals, one where you are giving 20% off on top of a 20% discount, and one where you are simply giving a 40% discount, most people would prefer to layer them, even though the 40% discount is actually cheaper.
  • Relative discounts: A 10% discount off a 20 dollar item is seen as a better deal than a 10% discount off a 100 dollar item. Even though the second discount takes off more money, at a lower price point customers feel the difference.
A group of shoppers show each other their purchases, the pschology behind deals and discounts has a wide variety of approaches. Selz is the ecommerce platform to grow and scale your business.

3. Using Language to Upsell on Deals and Discounts

How you word your deals and discounts affects how they are perceived. For example, “Get $X off” puts the focus on what the customer stands to gain, whereas “Save $X” puts the focus on the loss the customer can avoid. You can focus your broader marketing for discounts and deals around these ideas. For example:

  • “Thrifty shoppers know that January is the time to buy. Get $10 off your next purchase- we’re practically giving it away.”
  • “It’s a new year and we’re all looking to save a little after the holiday rush. This week only, save $10 on your next purchase.”
a neon sign shows how precise langauge can convey a big message in the psychology behind discounts and deals. Selz is the ecommerce platform for growing businesses.

4. When Deals and Discounts Go Bad

On the other hand, deals and discounts can become problematic. If you aren’t careful these pitfalls can hurt your bottom line.

Unlimited Duration

If you let the discount or deal run for too long, it loses its urgency. As a merchant, you lose your power because your customers believe the offer is always going to be there. They don’t follow through on completing the purchase and abandon their shopping cart because they feel that they can come back and complete the purchase later. Chances are, they won’t.

Avoid running a single promotion for more than a month. Keep it short and sweet. Use your email marketing, social media, and site banners to make a sense of urgency clear.

Unlimited Use

It can be tempting to run back-to-back discounts and deals as a way to drive business. This can end up hurting your business in the long run, as the discounts and deals you run lose their sense of urgency. This leads to an issue of customers stubbornly refusing to pay full price. Now, of course, they’re not picking up the phone and haggling with you, but they will resist purchasing. Here’s how. A customer may want to buy a specific, say, piece of jewelry (link) in your online store. Now, they’ve seen that you offer a lot of discounts, ranging from 20% to 40%, almost back to back, once or twice a month.

Even though this customer really wants that beautiful piece right now, they’re not going to complete the sale. Instead, they’re going to watch and wait for another sale and promotion to come along when they can save money.

Multiply this effect by your entire customer base, and you’ve got a serious problem. Your conversions are lower, and you’re making less of a profit on each item. You become trapped in a cycle of only being able to sell products at a discount, which seriously diminishes your profit. Occasional limited-time offers, on the other hand, can spike sales at key points in the year, or help you clear out existing inventory to offer new products.

A person counting pennies shows how the psychology behind deals and discounts can backfire, and customers might resist paying full price. Selz makes selling simple and powerful.

5. A Balanced Strategy

It’s easy to think that with all these pitfalls, merchants should avoid sales altogether. But, don’t be turned off just yet. There are a few excellent ways to utilize discounts and promotions as a powerful tool.


Whether people are gung ho for Halloween or stocking up the cooler for the Fourth of July, festivities make people feel like shopping.

Whether they are buying gifts or picking up a little something for themselves, this is a prime time to incentivize your customers with something like a dynamic QR code to make extra purchases.

Your sale can run the length of a holiday weekend or as a last-minute, week-long inventory purge with express shipping the week before Christmas. Feel free to get creative!

Seasonal clearance

Not every business will find this applicable, but there is a way that you can make it work in just about any industry. The idea is simple. You’ve got to get rid of the old to bring in the new, and old inventory sitting around on your site diminishes customers’ overall sense of urgency. After all, if they’re going to have a product in stock forever, why splurge on it today?

Now, some businesses do this quarterly, or at the end of summer or end of winter. Some even do it annually. We recommend starting with an annual or semi-annual clearance sale to start, just to ensure you aren’t spoiling your customers with back to back sales.

A gift for existing clients

Customers love to feel appreciated. Sending your best existing clients a free product or a coupon is a great way to build customer loyalty. The gesture does not have to be big- in fact, a simple token of appreciation goes a long way. Free shipping, BOGO (buy one get one), and other special discounts are a great way to show your appreciation and give customers a great reason to buy from you again.

Remember: most businesses sink or swim depending on their ability to grow a culture of repeat business. Remember, 40% of online sales come from existing customers.

A customer hands over their credit card to a cashier without hesitation. The psychology behind deals and discounts increases conversion rates for ecommerce.

So, we know that deals and discounts work on the principle of urgency. The only thing to keep in mind is resisting their temptation as a merchant, and use in moderation. When used strategically, they can be an effective marketing tool to help your business gain new clients, reach new markets, and retain existing clients. How do you use deals and discounts in your business? Let us know in the comments!

About the author

Rilind Elezaj

Rilind Elezaj is an is an off-page SEO specialist.

He is also the founder of SEO for X, or SEO for Anyone, a website that aims to raise awareness and capacities of business people and enthusiasts in regards to most recent digital marketing trends, with special emphasis on Search Engine Optimization.


  1. Tara Storozynsky

    Hi Lo, glad you found it to be helpful! Thanks for reading FounderU and commenting.

  2. Lo

    This is super helpful thank you! Sometimes I feel pressure to make nonstop discount codes and stuff.

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