A Guide to Discounts and Promotions for D2C Brands
It's important to distinguish the difference between a discount and a promotion and when direct-to-consumer (D2C) should use each.
With the holidays right around the corner, every brand owner has one big question in mind: How much should I be discounting my products?
For many businesses, whether established industry leaders or nimble startups, the holiday season is the biggest revenue driver of the year. With retailers slashing prices left and right, it can be tempting to do the same just to stay competitive, or at least increase sales.
Thankfully, we’re here to help take some of the stress away. Use this tool to craft a discounting strategy while keeping your profit margins intact. Then, once you’ve nailed down precisely what deals to offer, make sure to launch a cross-channel holiday campaign that promotes your sale far and wide.
Psst: Don’t forget to segment your campaign for different first-time shoppers and repeat customer profiles to ensure they find the perfect gifts they need!
Want more tips to ace your offer? Check out these tips on the psychology of discounts.
Plug in the cost of the item and the markup, then experiment with different discount percentages and see how they affect your sale price, profit, and gross margin!
ℹ️ Prices rounded to nearest cent. Percentages rounded to nearest whole number.
Definition of terms:
Cost of Item: How much it costs to manufacture the product.
Markup: The amount of overhead and profit added to the production cost.
Holiday Discount: How much you’re planning to discount the product for the holiday season (as a percentage).
Sale Price: How much the customer is paying.
Profit: Your revenue minus the cost of the item.
Gross Margin: The higher the number, the more profitable your business.
Beyond these calculations, keep these tips in mind as well:
If you can’t afford to discount your products, explore alternative deals such as free shipping, extra loyalty points, or small freebies added to every order.
Be careful about discounting popular products — you want to ensure you have enough inventory at hand to last the entire holiday season.
Keep your discounting strategy as simple as possible — nobody likes having to calculate prices in their head!
Now that you've decided on a discount or sale, utilize the offer in your marketing campaigns! Discounts are a great way to entice new customers. You may also consider making the sale more exclusive to a specific set of customers, like repeat buyers, to build brand loyalty as well as increase purchases.
Did you know that you can use AdRoll to launch, optimize, and report on your ad campaigns? Click here to learn more.
Want more strategies and resources on creating a successful holiday campaign? Check out the guides below!
Last updated on October 17th, 2022.