How To Use Promotional Pricing Strategy (Pros, Cons  + Examples)

How To Use Promotional Pricing Strategy (Pros, Cons + Examples)

We’ve all been there…

We see a product on promotion and we see an opportunity.

Maybe you’ve been thinking of this particular product for a while or maybe it’s new to you.

Either way, the reduced price and perceived value pull you in.

It’s an easy decision…

“Look at what the value is and look at what I can get it for. It’s a no-brainer.”

And just like that, you’re pulling out your credit card and making that buying decision.

But why is promotional pricing so effective, and how and when should and shouldn’t you use this strategy?

That’s exactly what you’ll learn in this article (along with some top examples, of course).

What is Promotional Pricing? (Strategy Pros, Cons & Examples)

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What is Promotional Pricing?

Let’s start with the definition of Promotional Pricing.

Promotional pricing is a pricing strategy used by brands that want to drive sales in the short-term. They do this by temporarily reducing the price of products or services to entice customers to buy before the offer expires, often through integrated marketing campaigns.

Without a doubt, promotional pricing is one of the most effective strategies for driving short-term sales.

Brands that leverage it effectively can expect to see revenue growth for the period of the promotion.

Although promotions tend to be associated with retailers, they are also used frequently by restaurants, gyms, airlines and service providers to name a few.

Essentially any brand that wants to drive more sales in the short term can leverage the promotional pricing strategy.

The Promotional Pricing Goal

The goal of promotional pricing is to drive more sales and revenue in a short time to boost the immediate revenue and the bottom line for the quarter or year.

Often this approach is used as part of a longer-term strategy and not as a standalone approach to pricing products and services.

Promotional pricing is without a doubt, a highly effective strategy for driving more sales. However, its effectiveness over time depreciates.

Brands that use promotional pricing need to be aware of the pros and cons, which we’ll cover a little later.