Retail Discount: Generous or Stingy Retailers


Retailers want to have happy customers, so in general they want to get the best deal for customers when there are multiple options. In details, they can be generous or stingy; and they can be both. Behind the scene, it mostly depends on who sponsors the discounts.

Compounding

If retailers covers the cost of discounts, then they want real compound in general, i.e. two 10%-off discounts makes 19%-off all together. Now, if a third party sponsors the discounts, then they may appear generous: two 10%-off makes 20%-off all together.

Least expensive discount

We have covered already that some retailers prefer the best deal for the customer, while a few prefer an outcome that favors retailers.

Smaller discount base amount?

By default, the discount base amount is the item price. If a third party pays partially, for example, $30 out of a $100 product, the retailer may want to apply its own 10% on the discount base amount of $70.

Related: Retail Discount Design – Mix and Match Discount II

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