9 Different Types of Discounts to Boost Your Bottom Line
Explore the different types of discount strategies that can help boost your business’s sales, from seasonal discount pricing strategies to automatic discounts.
Updated April 1, 2025
Understanding the types of discount available is crucial for businesses looking to boost sales and engage customers effectively. Whether you're considering automatic discounts for seamless promotions or implementing a seasonal discount pricing strategy to move seasonal inventory, choosing the right discount for your store is essential.
Each discount serves a unique purpose and can be tailored to specific business goals, such as increasing customer retention, attracting first-time buyers, or promoting a product at a discounted rate. In this post, we’ll explore the different types of discounts and how they can be strategically implemented for maximum impact.
» Turn shoppers into loyal customers — automate Shopify discounts with Auto Rewards Toolkit
What are Discounts?
Discounts are reductions in the original price of a product or service, often used to encourage purchases or reward customer loyalty. They can take various forms, such as percentage-based discounts, fixed amount reductions, or special offers for specific groups, like new customers or bulk buyers.
Benefits of Using Discounts in Your Store
- Drives more sales: Nothing gets people to buy faster than a limited-time deal. Discounts create urgency and push hesitant shoppers to take action. Think Black Friday or Christmas, flash sales, or even an exclusive 24-hour deal for VIP customers. When done right, this can give your revenue a spike.
- Moves stale inventory: Do you have products that have been sitting on shelves (or in your warehouse) for way too long? Discounts can help clear them out fast, making room for new stock. A seasonal discount pricing strategy is perfect for this, like offering discounts on winter coats in March or swimwear in September.
- Attracts new customers: A well-placed first-time client discount can be the nudge a shopper needs to finally try your brand. However it's important to have a solid follow-up strategy so they don’t just grab the deal and ghost.
- Increases customer loyalty & repeat purchases: Offering different types of discounts also keep your best customers coming back. Loyalty programs encourage repeat purchases and make customers feel valued. Almost 70% of paid loyalty program members cite free shipping as a key motivation for joining.
- Increases Average Order Value (AOV): Strategic discounts can actually make people spend more. Ever seen those spend $100, get $15 back type of deals? That’s no accident. It pushes customers to add an extra item or two to hit that discount threshold, increasing your AOV.
Egnition | Auto Rewards Toolkit
Auto-generated personalized discounts sent via email.
Offer full/partial refunds, next-order incentives, and loyalty rewards.
Streamline the personalization process through generating unique discounts.
9 Different Types of Discounts to Boost Your Bottom Line
1. Percentage & Fixed Amount Discounts
A percentage discount reduces the price by a certain percentage of the original price. A fixed amount discount lowers the price by a specific monetary value.
Percentage discounts
- Percentage discounts are more appealing for higher priced items.
- 20% off a $200 product feels more substantial than a $20 discount, even though the savings are the same.
Fixed amount discounts
- Fixed amount discounts are more effective for lower-priced items.
- A $10 discount on a $50 product is more enticing than a 20% discount.
Tips to determine your ideal price reduction strategy:
- Understand your margins and make sure the discount doesn't erode your profit margins.
- Experiment with different discount levels to see what resonates with your audience.
- Align discounts with customer expectations and perceived value. Remember, 25% off feels bigger than $50 off, but $50 off a $200 product sounds better than 25%.
» Easily create a percentage discount in Shopify in a few steps
2. First-Time Client Discount
Offering discounts to new customers can significantly boost acquisition rates by reducing the initial purchase barrier. However, it's very important to have strategies in place to retain these customers beyond their first purchase.
These strategies include:
- Follow up with a post-purchase email to thank them
- Offer personalized product recommendations
- Send a loyalty incentive to get them to shop again
Example: Many Shopify brands use a pop-up offering 10% off for first-time buyers in exchange for their email. Then they send follow-up emails with product recommendations and exclusive member-only deals.
3. Loyalty Discount
Effective loyalty programs, like tiered rewards or exclusive offers, encourage repeat business by making customers feel valued.
Example: Sephora’s Beauty Insider program uses tiered rewards to keep customers engaged. Higher spenders unlock better perks, like exclusive discounts and early access to sales, encouraging repeat purchases.
» Learn more: Do rewards lead to better retention?
4. Seasonal Discount Pricing Strategy
Seasonal discounts tap into natural high-spending periods and help businesses move inventory at the right time. Consumers expect deals around holidays, seasonal changes, and major shopping events, making these promotions an easy way to boost sales.
Strategies for seasonal discounts:
- Pre-holiday promotions in early November help brands secure sales before Black Friday, offering early access to deals to stand out from the competition.
- Post-holiday clearance sales in January move excess inventory while consumer demand remains high.
- End-of-season sales, like discounting winter items in March or summer products in September, ensure stock is cleared without undercutting next season’s pricing.
Remember: Promotional pricing can complement seasonal discounts but is not tied to specific times of year. It creates urgency through limited-time offers, while seasonal discounts align with natural shopping trends. Combining both strategies can boost sales effectively during peak periods.
5. Flash Sales & Limited-Time Offers
Flash sales and limited-time offers trigger impulse buying by creating FOMO. When shoppers see a deal with a ticking clock, they’re more likely to act fast instead of waiting or overthinking their purchase.
This work well for:
- Seasonal promotions
- New product drops
- Inventory clearances
Tip: To make these sales effective, you should limit availability (24-48 hours) and use clear, time-sensitive messaging like "Ends Tonight" or "Only 10 Left."
3 pitfalls to avoid with flash sales:
- Overusing flash sales: Flash sales too often lead customers to wait for discounts rather than buying at full price. This reduces profit margins and devalues your products. Keep flash sales unpredictable and tied to special events for maximum impact.
- Not having inventory to support the demand: Failing to forecast demand can result in overselling products. Always ensure you have adequate inventory and set limits to avoid disappointing customers and damaging trust.
- Weak promotion: Flash sales need strong marketing to drive results. Without clear calls-to-action, countdown timers, and scarcity cues, sales lose urgency. Promote effectively to spur quick customer action.
» Ready to streamline your inventory forecasting? Start applying these Excel tips and techniques
6. BOGO Discounts
Buy-One-Get-One (BOGO) discounts allow customers to receive a free or discounted item when they purchase a specific product.
BOGO works especially well for:
- Consumables
- Seasonal items
- Fashion to clear out inventory quickly
Example: A clothing store runs a Buy One, Get One Free promotion on select T-shirts. When a customer buys one T-shirt, they receive another one for free.
7. Bundled Discounts
Bundled discounts are a type of discount where multiple products are offered together at a reduced price compared to purchasing them individually.
Bundled discounts thrive in industries like:
- Electronics
- Beauty
- Fitness
- Subscription-based businesses
Example: An electronics store offers a bundle discount on a laptop and a carrying case. Customers can buy both items together at a discounted price, such as $150 for the bundle, instead of paying $180 if purchased separately.
» Find out more: Is it possible to apply a discount to multiple items in Shopify?
8. Automatic Discounts
An automatic discount is a type of discount that is applied automatically at checkout, without the need for customers to enter a promo code. Automatic discounts are most effective in industries with high volume transactions and repeat customers, such as:
- e-Commerce
- Retail
- Travel & hospitality
Tip: If multiple automatic discounts apply at once, you might unintentionally cut too deep into profits. Ensure careful rule-setting to prevent discount abuse.
» Check out these expert tips on Shopify discount codes
9. Volume-Based Discounts
Volume-based discounts offer customers a reduction in price when they purchase a higher quantity of a product or service.
Volume-based discounts works best in industries, such as:
- Wholesale and B2B
- Retail
- e-Commerce
- Electronics
Best practices for volume-based discounts:
- Offer meaningful but controlled discounts: Ensure the discount feels valuable but does not significantly cut into your profits.
- Use volume pricing for margin-friendly products: Apply these discounts to products where margins allow it or where you need to clear inventory.
- Limit discounting popular items: Avoid offering volume discounts on best-selling items unless it's part of a seasonal promotion to avoid devaluing them.
» Learn how to bulk add discounts to your Shopify store
Egnition | Auto Rewards Toolkit
Boost sales and customer engagement with Egnition's Auto Rewards Toolkit — start optimizing your discounts today.
Factors to Consider Before Implementing a Discount Strategy
Before rolling out a discount strategy, you need to ensure it aligns with your long-term profitability and brand positioning.
- Brand perception: Be cautious with frequent discounts, especially if you’re positioning yourself as a luxury brand.
- Clear discount conditions: Structure your discounts in a way that boosts AOV rather than just reducing prices.
- Customer behavior: Keep track of whether customers only purchase during sales; if they do, it may be time to reconsider your pricing model.
» While discounts in your store are key, here are more general tips to improve your store
Boost Sales with the Right Types of Discount
Understanding the types of discounts available, such as automatic discounts and seasonal discount pricing strategies, is crucial for driving customer engagement and boosting sales. Each discount type offers unique benefits, whether you're aiming to increase average order value, clear out inventory, or attract new customers.
To ensure your discounts work effectively, it’s important to align them with your business goals and monitor customer behavior. By doing so, you'll be able to refine your strategy over time, ensuring long-term profitability and brand growth.
» Want to take your discount strategies to the next level? Use Egnition’s Auto Rewards app to automate and optimize your approach
