Discount Strategy & Price Anchoring
Simulate the impact of discount strategies and price anchoring on sales volume. Enter values for instant results with step-by-step formulas.
Worked Examples
Example 1: The 20% Off Trap
Problem:Price $100, Cost $80. Discount 20%.
Solution:Margin drops $20 -> $0. You make $0 profit regardless of volume.
Result:-100% Profit Impact
Example 2: High Margin Software
Problem:Price $100, Cost $0. Discount 20%.
Solution:Margin drops $100 -> $80. Volume +50%. Profit increases.
Result:+20% Profit Impact
Frequently Asked Questions
What is Price Anchoring?
A cognitive bias where people rely heavily on the first piece of information offered (the 'Anchor'). In retail, showing '$100' crossed out next to '$80' makes $80 feel like a win, whereas $80 alone feels neutral.
What is Price Elasticity?
A measure of how sensitive demand is to price. Elasticity of -2 means a 10% price drop causes a 20% demand increase. Luxury goods are often 'Inelastic' (demand doesn't change much with price).
Should I discount new products?
Usually no. Use 'Introductory Pricing' carefully. Launching low makes it hard to raise prices later. Better to add value (bonuses) than cut price.