Discounts Every mega sale that happens online, be it festive, year-end, or the big shopping festivals, makes one wonder how the sellers arrive at the amount of discounting. Why does one product get 60 percent off and another barely reaches 10 percent? Why such a wide fluctuation in prices for the same sale?
The truth is, these big sales discounts are not a random act. It’s actually a calculating decision based on data, costs, competition, and the business strategy being pursued. This article will discuss how sellers decide on the discount quantum during big sales, purely for information that may help one understand what goes behind the scenes.
Cost Structure & Profit Margins Set the Discount Limit
Behind every discount decision, of course, is the seller’s cost structure. First, sellers calculate how much a product costs them-manufacturing, logistics, warehousing, commissions from platforms, fees related to marketing, and taxes are taken into account. Only then will the sellers know just how much they can afford to give away as discount without incurring any losses.
A product with higher marginal profits like clothing items, accessories, private-label items, and old electronics can sustain deeper discounts. On the other end of the spectrum are items like smartphones/electronics with low marginal profits that may have limitations to discount unless cost is shared.
The reason for this is that some products tend to have higher levels of discount every season than others.
Inventory Pressure Plays a Huge Role
Discounts rise steeply as the sellers are subjected to inventory pressures. Inventory that is not sold results in costs incurred each and every day. Major sales offer the sellers an opportunity to sell the unsold products.
Inventory situations that trigger higher discounts:
- Seasonal Stock Nearing End of Relevance.
- Old models replaced by new launches.
- Inventory Overstock due to Incorrect Demand Forecasting.
- Slow-moving SKUs in the warehouse.
Therefore, the sellers are even willing to sell without any profit, i.e., zero margin sales, just in order to return their capital as well as free their storage space.
Competition In Price Wars
When large-scale selling occurs, prices are monitored in the marketplace by the sellers. If several sellers are selling the same product or a variant of the product, then discount form a part of the pricing strategy as a competition tool.
Sellers use automated pricing tools that:
- Track Competitor Prices in Real-Time.
- Adjust the discount dynamically.
- Pricematchingor undercuttingcompetitor’sprices.
Perhaps that is especially most common in things like the electronic industry or household items and daily necessities, as they are easily comparable. Discount in such groups are possibly measured not by the greatest profit, but by the most acquired.
Platform Influence & Sponsored Discounts
Online commerce platforms are active players in deciding discounts during a big sale; in turn, a seller might not finance a discount alone, as platforms also part-sponsor it.
Platforms can:
- Pay commission rebates.
- Ad credits in exchange for deeper discounts.
- Promote products with higher levels of agreed-upon price cuts.
- Push sellers to meet “deal eligibility” thresholds.
Sellers that are willing to cooperate receive better positionings of their items on the home page, banners of deals, and search results. Conversely, those that are unwilling to do so might remain undiscoverable during the sales process.
Consumer Psychology Shapes Discount Numbers
But discounts are also a function of buyer perceptions, not just cost. There are several psychological pricing strategies that sellers employ to make deals more appealing.
Instead of granting a “real” discount, the seller may:
- Inflating the original price-MRP anchoring.
- Use round numbers like 50%, 60%, or 70%.
- Time discounts during peak shopping hours.
- Combine discount with coupons and bank offers.
It is not only to reduce price, but also to trigger urgency and emotional buying.
The objectives of the seller are not always the same for all sales.
Not all sales have the same objective, so sellers will decide on discount levels based on what they want to achieve during that event.
Some sales deal with:
- Liquidation of inventory.
- Customer acquisition.
- Increasing brand visibility.
- Improve Seller rating and reviews.
- Results in reaching quarterly revenue goals.
The flagship sale, for example, might emphasize volume over profit, but in a smaller sales transaction, the focus will be on margin protection.
Brand Control & Pricing Policies
Most brands regulate how much discount a seller can provide, which is often the case in electronics, luxury goods, and premium fashion. The sellers cannot always cut prices as they please.
Brand-imposed rules may include:
- Minimum advertised price policies.
- Maximum discount caps.
- Restrictions on participating in the sale.
- Special pricing for selected partners.
It is because of this that a similar product from different platforms and sellers may sell at different discount.
Forecasting Demand & Data Analytics
Modern sellers rely so much on data. The sales history, user behaviour, and demand forecasts are guiding in making discount decisions.
Using analytics, the sellers estimate:
- Demand that is expected by different levels of prices.
- Elasticity-how price impacts sales volume.
- risk of stock-outs or overstocking.
- The balance between profit and volume trade-offs.
Discounts dynamically go in line with the real performance during sales.
Offers for payment and cashback usually exist separately
Most buyers feel that sellers offer huge discounts, but actually, bank offers, cashback, and no-cost EMIs are funded by banks or platforms.
This would allow sellers to:
- Maintain headline prices.
- Still give “effective discounts”.
- Attract price-sensitive buyers.
So the final deal price looks like a generous, even when actually the seller’s discount is modest.
How Sellers Balance Discounts During Big Sales (Summary Table)
| Factor | How It Will Affect Discounts |
|---|---|
| Cost & Margin | Sets maximum discount limit |
| Inventory Pressure | Increases discount urgency |
| Competition | Forces on price matching |
| Platform Support | Enables deeper cuts |
| Consumer Psychology | Shapes the appearance of discounts |
| Seller Objectives | these Determine |
| Brand Restrictions | Limits Flexibility |
| Data & Forecasting | Optimizes pricing |
| Bank & Cashback Offers | Enhance perceived savings |
Two Key Takeaways for Shoppers
- Big discounts don’t necessarily result in great losses for sellers
There are various discounts available and most are backed either by platforms, brands, or the banking system. Sellers often try to retain margins while offering attractive prices.
- “The best deal in a given market typically will be a combination, rather than a discount, alone
Real savings often result from combining seller discounts, bank discounts, cash back, and coupon discounts rather than focusing only on price discounts.
Final Thoughts
“Discounts during major sales are not actually charitable acts on the part of a merchant.” Instead, these discounts are arrived at using strategy, analysis, and bargaining to determine what a merchant can afford to give away, often on an hourly basis.
For the shopper, the key to this process is to understand that it is occurring. For the smart shopper, the keys to shopping are not merely discounts, they are understanding why the discounts are available.
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Frequently Asked Questions (FAQs)
Is there a sudden decision or planned process for big-sale discounts?
Discounts set during big sale occasions are typically fixed in advance; thus, prices are generally adjusted during the sale.
Do sellers lose money during a sale?
Rarely. Most of the discounted offers are backed by the brand or the bank.
Why do some products attract high discounts, while others do not?
For high discounts, items with high margins or stock surplices are chosen, while new or premium items have minimal cuts.
Does bank offer and cash back come from sellers?
No. Bank discounts or cashback are not provided by the seller but rather by the banks/platforms themselves.
Can sellers change their discount offers during a sale?
Yes. The prices can be varied dynamically based on the demand-sells relationship.
