Discount Pricing Strategy: To Discount or Not to Discount?

Discounts are a double-edged sword. Use them wisely, and they can boost conversion, bring in high-value customers, and accelerate growth. Use them indiscriminately, and you’ll quickly find yourself driving down profit margins and damaging long-term brand perception.

It’s a delicate balance—and one that every marketing, commercial, and eCommerce leader needs to get right.

In this guide, we’ll walk you through how to think about discounting in 2025: when it makes sense, when it doesn’t, and how to do it in ways that preserve brand value while still driving commercial results.

We'll also cover ten types of discounts that are still effective, and 12 optimisation tactics that help you deliver strategic offers without training your customers to expect constant discounts.

Let’s start with why discounting deserves a spot on your marketing roadmap today.

Why Discounting Still Matters in 2025

Discounting isn’t going anywhere.

With customer acquisition costs (CAC) rising and customer retention sitting firmly at the top of most brand strategies, discounts—done right—are an incredibly effective way to nudge behaviour, increase conversion, and reward loyalty.

Here’s why discounting is still relevant for growth-minded brands:

Offers encourage first-time purchases (a key step in converting browsers into buyers)
They make customers feel seen when tailored to behaviour (e.g. loyalty milestones, birthdays, referrals)

They can help you clear inventory, boost basket sizes, and drive urgency (without hurting CLV if done correctly)

The modern consumer expects value. That doesn’t mean they expect everything to be cheap—it means they want a reason to care, and to act. Discounts tied to clear logic—“here’s 10% off because you brought us a new customer”—feel rewarding, not restrictive.

The key? Use discounts with purpose, not panic.

The Key Rules of Discount Pricing

It’s not about banning discounts altogether. It’s about using them intentionally, with a strategic framework in place.

Let’s explore two of the most important principles when thinking about how, when, and why to discount.

Discounting is good, so long as you can legitimise the discount.

• It’s their first time shopping with you
• They made a high-value purchase or hit a basket threshold
• They’ve brought a friend via a referral
• They’ve shown loyalty through multiple orders
• You’re clearing out seasonal stock

These scenarios allow discounts to feel earned—and therefore legitimate. They’re also less likely to damage your pricing power or erode brand equity over time.

Ask yourself a question 

“If I give the customer a discount this time, will it create an expectation that they can automatically get a discount next time without doing something I want them to?”

It’s the single most important question when deciding whether to discount.

If the answer is yes—stop and rethink your approach.

Discounts should change behaviour. They should lead to outcomes you want: conversions, referrals, increased average order value (AOV), re-engagement, retention. If your discount doesn’t serve one of those outcomes, or worse—it creates a behaviour you don’t want (waiting to buy, always expecting a code)—you’re discounting in the wrong way.

The Potential Dangers of Discounting

Done right, discounts drive growth. Done without discipline, they create downstream challenges that impact profit margins, brand positioning, and customer experience.

Here are four common dangers of discounting—especially when used as your default tactic for conversion.

1. Margin Compression Hurts Growth

Every discount eats into your revenue.

If you’re consistently shaving 10-20% off your pricing across large customer groups, it adds up fast. This limits your ability to invest in growth, marketing, product improvement, or loyalty programmes.

In short: indiscriminate discounting is expensive. Do the maths.

2. Customers Learn to Wait for Sales

Repeat customers are valuable. But if they start to realise you run a promo every weekend, you’re training them to delay future purchases until the next discount.

Urgency disappears. So does full-price revenue.

3. Your Brand Perception Can Suffer

Consistency matters. If your website constantly screams “50% OFF EVERYTHING”, eventually customers wonder: is this a premium brand, or a bargain basement?

Unless you’re positioned as a discount-first retailer (and even then, branding matters), your promotional activity needs to protect the equity you've worked hard to build. That means using discounts sparingly and purposefully.

4. Discounts Become Noise

When discounts are everywhere, they lose their impact.

Customers keep scrolling, pull up Honey or RetailMeNot, and assume someone else out there has the next big code. That undermines both customer trust and perceived value—two things you can’t afford to lose in today’s competitive climate.

10 Types of Discounts That Still Work

If you want to discount strategically, it starts with knowing which types of offers drive both engagement and long-term business value.

Here are 10 types of discounts that work because they’re expected, understood, and tied to customer behaviour—not desperation.

1. Welcome Discounts for First-Time Shoppers

Great for encouraging first purchases and giving new customers a taste of your brand. Common in referral journeys where someone was introduced by a friend.

2. Seasonal or Event-Based Promotions

Tie offers to relevant dates (Black Friday, end-of-season cleanout, anniversaries) to keep them time-bound and purposeful—not perpetual.

3. Tiered or Volume-Based Savings

Encourage bigger baskets ("Spend £75, save 15%") and reward higher-spending behaviours. Keeps value scalable.

4. Buy One, Get One (BOGO) Incentives

Shift slow-moving inventory while increasing basket sizes. Customers love the perceived value.

5. Loyalty Rewards and Member Perks

Offer VIP-only discounts for those who’ve reached certain milestones. Drives exclusivity and repeat engagement.

6. Gift-With-Purchase Offers

Add value without lowering your price. Works especially well for beauty, lifestyle, and DTC brands.

7. Time-Limited Flash Sales

Use sparingly to drive urgency among high-intent users. Should feel exciting, not expected.

8. Free Shipping Thresholds

Still one of the most conversion-boosting offers. Test carefully to find your ideal threshold.

9. Social Impact Offers (Buy One, Give One)

Great for purpose-driven brands. Creates emotional engagement and aligns incentives with impact.

10. Product Bundling for Perceived Savings

Bundling increases AOV and cross-sell opportunities. Especially effective with complementary or consumable products.

12 Discount Optimisation Tactics That Preserve Brand Value

Not all discount tactics are created equal. The most effective promotions generate short-term impact without sacrificing long-term brand equity.

Here are 12 ways to optimise your offer strategy:

1. Make Every Offer Feel Exclusive

Treat your discounts like invitations—not announcements. Use codes for subscribers, loyalty members, or referrals only.

2. Add Urgency with Expiration Dates

A countdown drives action. “48 hours only” performs better than open-ended offers. Just be careful not to overuse scarcity—it loses effectiveness.

3. Choose the Right Format: Flat or Percentage?

Consider AOV. Flat discounts (e.g., £10 off) may feel more impactful on lower-ticket items. Percentages work better as spend increases. Test what registers with your audience.

4. Use Randomised or Dynamic Coupon Codes

Prevent code-sharing and build exclusivity. Plus, it makes customers feel like they got something personalised.

5. Target Discounts by Customer Segment

Not all customers need a promo to convert. Use behavioural data to selectively serve offers where they’re needed (e.g. bounce prevention or winback flows).

6. Auto-Apply Coupons at Checkout

Eliminate coupon friction and remove risk of drop-off. If the discount is tied to an action (e.g. referral, loyalty), make it seamless.

7. Use Email and SMS to Remind Visitors

Sometimes a reminder is as powerful as a new code. Recovery flows with urgency messaging convert surprisingly well.

8. Gamify Offers for Engagement

Spin-to-win or mystery discount mechanics can increase time-on-site while holding average discount value steady.

9. Reward Customer Actions, Not Just Purchases

Offer discounts not just for buying, but for completing surveys, writing reviews, sharing content or bringing a friend.

10. Match Discounts to Source of Traffic

Tailor promotions based on the acquisition channel. Intentionally different offers for affiliates, referrals, or email can improve ROI.

11. Leverage Influencer-Specific Discount Codes

Drives trust, social proof and exclusivity. Just make sure creators clearly explain the value behind the brand—not just the discount.

12. Scale Back Gradually to Reset Expectations

If your audience has grown dependent on constant promotions, don't pull the plug overnight. Taper them down slowly, increase personalisation, and focus more on value-added offers.

Conclusion

Discounting isn’t the enemy of a strong brand. Blanket, context-free discounting is.

By rethinking how you offer promotions—and aligning them to customer value rather than mass volume—you turn discounts into strategic tools for acquisition, retention, and growth.

Use them to reward, motivate, and influence behaviour (especially within high-intent channels like referrals) and you’ll avoid the discount death spiral.

Let’s leave the question of “To discount or not to discount?” behind.

The better question is: “How can we discount in a way that motivates our customers without training them to expect less?”

Want to see how high-performing brands use referral incentives instead of sitewide promo codes? Book a free demo and explore how Mention Me helps you grow sustainably, with offers customers actually deserve.