Let's run through a hypothetical scenario. Say your company is in a bit of a tough spot. Your product or service isn't moving with the oomph you'd like it to. Sales are sort of stagnant, and as far as you can tell, consumer interest in your brand is waning.

You realize your business needs a shot of life. So, what can you do? Well, you could try something drastic. You could look into rebranding. You could reevaluate your messaging. You could restructure your entire sales process. But those kinds of actions would probably be overkill.

As I said, you need a shot of life — not a new identity.

If your business hits a wall like that, particularly if you're in retail or ecommerce, you might just need to generate some quick demand and spur consumer interest. One of the best ways to do that is through a practice known as promotional pricing.

Let's get a feel for what that term means, some of the more prominent examples of it, and what you need to do to implement a successful promotional pricing strategy.

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A promotional pricing strategy is one of the best ways to generate quick demand for products or services. In most cases, one of these efforts is confined to a tight time frame with extensive promotion. It creates a sense of urgency — the impression that consumers will be missing out if they don't buy soon.

Promotional pricing is a quick-hitting, effective practice that's generally best done in doses. In many — if not most — cases, businesses that constantly undertake large-scale promotional pricing efforts can wind up excessively cutting into profit margins and leading their customers to expect lower prices consistently.

As I mentioned earlier, the practice is generally associated with forums like retail and ecommerce, but there are different promotional pricing strategies that can suit virtually any business. Here are some of the more prominent examples of promotional pricing.

1. Flash Sales

A flash sale is when businesses, typically in ecommerce or retail, offer substantial discounts on their product or services within a relatively short time frame. For instance, Amazon annually puts on Prime Day — a two-day event where it offers a wide array of deals, spanning virtually every category of product the site covers.

promotional pricing amazon

Image Source: Marketplace Pulse

The vast majority of Prime Day deals aren't offered year-round, making that two-day window a specific, exclusive point for those bargains. Since those discounts are collectively isolated and advertised to generate quick demand, they constitute a flash sale and, in turn, an example of promotional pricing.

2. Buy One, Get One Free (BOGOF)

The "buy one, get one free" deal — or some sort of variant involving a reduced-priced good or service available with the purchase of a full-priced one — is one of the more prominent examples of promotional pricing. In many cases, this kind of deal can be advertised through promotional materials like coupons. Here's an example from Papa John's:

promotional pricing papa johns

Image Source: InvoiceBerry

With this strategy, a business offers an additional, free product or service to incentivize the purchase of another one. The price of the initial "one" in "buy one get one free" is typically higher than the other, so when you sell using this kind of promotional pricing strategy, you're selling two products — ones that are proportionally cheaper but still not really half-priced.

That's why you need to be selective in how you choose the products you use with this strategy. Make sure you're selling goods or services that you can still profit from at proportionately lower price points but significantly higher volumes.

3. Loyalty Programs

A loyalty program is a promotional pricing strategy where a company incentivizes brand loyalty by offering deals and discounts in exchange for consistent, repeated purchases.

Customer acquisition is often more expensive and labor-intensive than retaining current ones. That's why implementing a loyalty program can be a savvy, cost-effective move for businesses interested in consistently generating revenue from dedicated consumers. Here's an example of one from Dunkin':

promotional pricing dunkin

Image Source: Dunkin'

The term "customer loyalty program" covers a wide range of practices. It could be anything from a major airline leveraging a frequent flier miles system to a local sandwich shop giving out punch cards for free sandwiches in exchange for a fixed number of visits.

If you choose to implement a customer loyalty program, its structure will hinge upon the size and nature of your business — in addition to the general intention behind your implementation of the program as a whole.

4. Seasonal Sales

A seasonal sale is essentially an extended flash sale — typically tailored to move merchandise relevant to a specific time of year. A seasonal sale could be a promotion for discounted swimsuits in the summer or popular toys during the holiday season. Here's an example of a seasonal sale from Old Navy for back to school clothes:

promotional pricing old navy

Image Source: Old Navy

Implementing a seasonal sale generally works best for businesses that carry some kind of season-specific product or service. More often than not, consumers are most receptive to seasonal sales of products that bear some kind of appropriate seasonal significance.

If your company is running a campaign to actively promote and move winter coats throughout the month of July, consumers will probably be more confused than interested.

The relationship between product or service and seasonal timing might be the most important factor to consider when trying to coordinate this kind of promotional pricing.

Promotional Pricing Strategy

Finding the right promotional pricing strategy for your business relies upon some key factors and crucial questions. You have to consider the "why," "how," and "when" of your decision to implement promotional pricing.

Learn more about what dynamic pricing is and how it can impact your business in this helpful video:


The first point you have to address is why you're interested in implementing a promotional pricing strategy. Are you trying to generate some buzz for a new product or service? Are you trying to spur some customer traffic as quickly as possible? Are you trying to unload some extra inventory? Are you looking to incentivize customer loyalty?

It's important to have a high-level understanding of what you want out of your promotional pricing strategy before zeroing in on what will work best for your business.

A plan for moving out-of-season inventory probably won't look the same as one designed to reward customer loyalty. Know what you're hoping to generally accomplish before hashing out the specifics. Once you have that "why" in mind, you can start to determine the "how."


Here's where you make an actionable solution out of the "why" you figured out earlier, but the overarching reason for your promotional pricing strategy is only part of the equation.

There are some other key factors you need to consider. What kind of promotional budget are you working with? How does your business operate? Are you in conventional retail? Do you sell via ecommerce?

Let's say you want to unload some excess inventory from a smaller, independent retail outlet. In that case, you might want to go with a flash sale for those items and advertise through billboards, flyers, and signs in your storefronts. But if you were running a large ecommerce site trying to encourage repeat business, you might start a customer loyalty program and promote it through paid social media advertising.

There's no one size fits all model for promotional pricing. What works for one company isn't guaranteed to work for another. You need to consider several factors before deciding which specific strategy suits you best, including your business's reputation, industry standards, brand identity, immediate needs, long-term goals, and financial situation.


Timing is another important factor to consider when determining an appropriate promotional pricing strategy. The "when" in this process can mean a few things — namely, the promotion's duration and time of year.

Promotional pricing strategies come in all shapes and sizes. An ongoing customer loyalty program will obviously last longer than a two-day flash sale. It's important to figure out a time frame that will suit your budget while still giving yourself the space to make good on the "why" you chose at the beginning of the process.

Another key factor with many promotional pricing programs is the specific dates you choose for your strategy to run its course. Certain times of year suit some strategies particularly well.

Promotional pricing — specifically flash sales — is notoriously popular on holiday weekends like Memorial Day and Veterans Day. So if you're considering implementing a promotional pricing strategy, always be mindful of when it's taking place.

Determining which promotional pricing strategy works best for you will take a lot of thought, familiarity with your business, industry knowledge, and careful consideration. It can be tricky to figure out the "why," "how," and "when" that suits you best.

Still, if you take the time to understand the various strategies available, look into what has worked well for companies like yours, and thoughtfully figure out prices that will be attractive to consumers without gutting your profits, you'll be able to implement a promotional pricing strategy that can serve you well.

sales pricing strategy calculator

 sales pricing calculator

Originally published Aug 4, 2020 8:00:00 AM, updated May 04 2021


Pricing Strategy