Types of Discounts
Percentage Discounts
Percentage discounts refer to the method where a certain percentage is deducted from the original price of a product or service. For example, if an item costs $45 and a 10% discount is applied, the final price would be calculated by subtracting 10% of $45 from $45.
Fixed Amount Discounts
Fixed amount discounts involve subtracting a specific amount from the original price. For instance, if a service costs $95 and you have a $20 off coupon, you simply subtract $20 from $95 to determine the final price.
The Impact of Discounts
Discounts play a significant role in consumer purchasing decisions. A study revealed that discounts could increase the likelihood of customers making a purchase. However, businesses should also be mindful of their discount strategies. Overuse of discounts can devalue the product or service and hurt the business’s profit margins. Balanced and strategic discounting is key to maintaining profitability while attracting more customers.