I discount, you discount, we both lose

Discounting a product for a limited time has been a tactic borrowed today and ingrained in industries where it makes no sense. Software is not food, there is no expiration date, no loss if it’s not consumed today. So why discounting software products?

Back in the 19th century, advertising was regarded as an actual rational activity whose purpose was to convey information and make claims in propositional forms. This happened in an era when advertising was created using mostly words, and it had the purpose of appealing to understanding rather than passions.

In his book “Amusing Ourselves to Death,” Neil Postman rehearses that in the 1890s, this context was wiped out, first by the massive adoption of illustrations and photographs, then by the nonpropositional use of language. That was also the time when advertisers adopted for the first time the technique of using slogans.

By the turn of the 20th century, advertisers no longer assumed rationality as the main consideration of their potential customers. “Advertising became one part depth psychology, one part aesthetic theory. Reason had to move itself to other arenas.”


Strange things happened a while back, right? Far from stopping this rationality decline, we doubled down. In the current Digital Age, product advertising became two parts tricked psychology and one part pseudo-rational reasoning. Logic is pummeled at every corner on the path of choosing to purchase a product or service, while the decision is artificially hastened by an arsenal of tactics such as the sales season.

Price is one of the key factors when choosing a product, and companies learned from psychology how to make it more appealing for the customer. Textbook examples are prices ending in “9” aimed to extend your budget limit to the maximum (e.g. $1999 is “certainly” NOT two thousand dollars), or huge discounts that nudge your attention to more expensive products, even if it’s very hard to assess the legitimacy (or history) of the starting price. Your emotional, impulsive brain is invited to take center stage.

Abusing the discount

Going back again throughout history, we know that perishable foods like fish or meat have a short shelf life unless frozen. And while freezers were not available until recently, it would make sense for traders to sell them sooner rather than later, often lowering the price in tandem with the freshness of the product.

Instead of throwing away edible food, merchants chose to cut their losses, sell it for less, and hope for better luck the next day. The same happens nowadays with food products where retailers favor to give customers a good deal if they get those products that expire within one or two days.

Discounts make perfect sense in the food industry, transforming waste into a win-win situation for both merchants and customers, each one willing to trade time for value.

Today, we’re living in a world of abundance and permanence. We don’t need to get software and store it on a shelf for winter.

This scheme of discounting a product for a limited time has been borrowed today and ingrained in industries where it makes no sense, apart from the mere act of selling for the sake of it.

Software is not perishable foods

We live in a different world, one where the marginal costs of creating and storing a copy of a software product are zero. Only the customer experience and support cannot be easily scaled. The software maker can calculate and set the price he considers fair for its product, and customers can make an upfront decision to buy it or not, thus allowing for a win-win situation for both of them.

If a digital product does not expire, why do you want to buy it at a discount?

Software is not food (maybe food for thought?). There is no expiration date, no loss if it’s not consumed today. There is infinite space on the shelves of our internet to stock all the software you would ever need, with no loss whatsoever. So why discounting software products?

Ending the discount

We’re a small and independent company with a huge interest in our craft. We’re able to offer a great experience to a limited amount of customers. We think it’s impossible to scale the team and the numbers of customers while maintaining the same focus and care.

The prices of the WordPress industry are set in a race to the bottom. And while the cost of building products is increasing, their average price is steadily going down, shifting the focus on a mass adoption of barely good-enough products.

For our own sanity, we could not stomach not aiming for the best products we are capable of crafting. We aim to find the right customers willing to pay a fair price for our work. That’s a healthy relationship we’re willing to put more energy and enthusiasm into, in the long run. 

Our overall marketing strategy is far from being focused on discounts, but we ran an annual sales campaign for the past two years. While it made financial sense, it doesn’t sit right with our goals and dreams.

Not being in alignment with our values and how we want to do business, we decided to stop making any sales campaigns in the future.

There is no reason to raise or lower prices depending on the time of the year. The software and the experience are the same all year round. So should be our prices.

The true cost of discount is “care”

There’s nothing wrong, in the absolute, to get a better price for a certain product or buy it at a reduced rate. The context in which this happens is what matters.

We’re living in times where support for small businesses is paramount to their health and optimal performance. Profits are smaller, competition is harder, and most of the money seems to pour into ever-larger pockets, draining the small ones. 

Getting products or services from independent makers at a discount doesn’t do them any favors, in the long run. It just distorts their sense of reality and risks derailing their efforts. If you care about them and want to show your support, make your good intentions matter and don’t squeeze them even further. Everyone will win, in the long run.

Escape the psychological trap and try to make reason the basis of everything you buy. Once you’ve found the partners to invest your trust in, pay them their fair price — you trust them after all, right? You could take it one step further and remind those around you why this is important. Everyone will win, in the long run.


Discounting a product for a limited time is a most basic trick designed to whip up pressure where it should be none, and “gently” push you into making a quick decision out fear of missing out.

We dare to steer clear of this strategy and start a different movement that will challenge the status quo and bring back what we once had: a more rational and conscious mind to make decisions with.

Have a balanced and sane time, knowing that when you need our products or services, they’ll always be at the same price.

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George is a daydreaming designer with a desire to improve the world, to be a good and a meaningful person. He values calm but easily gets excited by the next challenge.

Conversations 8 Comments

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Mike Schinkelsays:
Relevant commenter background or experience:WordPress Engineer
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While you are probably correct that annual discounting is often done reflexively, it is not without merit in the software world; spoilage is not the only reason to discount. Discounting can also be about market segmentation, for example a “student” discount.

In the case of annual discounting such as Black Friday sales discounting can reach the cost conscious consumer for whom getting it when they need it is less important than getting it cheaply. Of course there may be a reason to avoid that market — such as potentially higher support costs — but for some vendors pursuing that market may increase total profit.

In summary, choose to discount should not be reflexive, but then neither should choosing not to. Every vendors scenario is potentially different and each should evaluate what makes sense for them.

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Georgesays:
Relevant commenter background or experience:Author and co-founder at Pixelgrade
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Thanks for stepping in, Mike! Using a flexible pricing structure for different market segments it’s not what I would call “discounting” — it is a rather good strategy for expanding the addressable market, especially when you’re selling globally, and you can take into consideration specific variables like the cost of living.

The only side that I argue is that those price changes shouldn’t be “time-sensitive” and delivered by a particular time when the world mutually agrees that it’s THE time to spend your money better. A student might need a product at the start of its year, and while he can wait for Christmas or Black Friday for a better deal, he cannot withstand this delay, so time becomes more important for him.

In my opinion, downgrading the prices reflexively is a poor strategy, and each of us should be aware and learn from it whenever we feel pressured to do it.

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coniliakissays:
Relevant commenter background or experience:Economist, blogger
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I will buy a theme this period. I am a student and see this as a great opportunity. I will share my experience. Discounting is never bad. It could hurt the creator if they have to discount something new. But again, they have all inspiration and creativity to start a new project. Thanks for your thoughts though

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Georgesays:
Relevant commenter background or experience:Author and co-founder at Pixelgrade
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Good points, Konstantinos! I’m glad that you’re willing to wait for this period and get a product at a better price. As a student, and for education generally, I think you should always be able to get access to resources for affordable prices.

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Greg Simassays:
Relevant commenter background or experience:Consumer
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Every company can do whatever they want, big or small. Honestly, this argument is somewhat ridiculous. Any company that seeks to justify why I should not save money on a product via a discount and seeks to inform me that paying less via a discount offered by the company is in some way indicating that I don’t fully care for the creator, is unfortunate. The buyer has no say on how a product is developed, priced, nor the profit margin therein. Don’t project shame or guilt (whether directly nor indirectly) on the discount purchaser ie consumer, it’s bad business. I suggest taking a different approach to communicating the message.

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Georgesays:
Relevant commenter background or experience:Author and co-founder at Pixelgrade
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Thanks for sharing your perspective, Greg!

With this article, I want to [1] make customers more aware when they are buying products on discounts, [2] encourage them to start looking through other lenses at companies that do not make any discounts, and [3] remind them to think twice when pressing those companies to follow the line.

Of course, there will always be companies and customers that find more sense to provide and get better prices within certain time periods. I’m not arguing with that, nor I want to blame them for their decisions—it’s their business, and they are free to run them whatever they think it’s in their best interest.

It’s the software industry that we’re in where I want to make more room for companies that put more value on getting a fair deal for customers that trust them, rather than focusing on the prices and how they can be “optimized” to fit the customer’s willingness to pay.

Breaking this vicious circle, especially for small and independent businesses, would create a win-win situation where companies share their offers transparently, and customers choose consciously based on facts without being incentivized with a better deal if they swiftly take the shot. I think this could be a small step to a better world!

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Paras Shahsays:
Relevant commenter background or experience:Solo WordPress product creator
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Thanks for writing this, George!

As a solo product creator in the WordPress space who doesn’t do discounts, I’ve received plenty of emails this Black Friday season asking my reasons. Wish I had known about this article before to direct them to.

Though, for me, landing upon the decision of not doing discounts was a bit different and personal:

Doing discounts on Black Friday or any holiday occasion somehow always felt unfair to me for a long time and that feeling kinda cemented when I had a personal encounter where I had purchased a product, and 2 weeks later, the prices were slashed down by 30% as a part of a festive promo.

Although I could easily afford the product even at the original price, seeing the prices discounted after 2 weeks somehow made me feel bad internally, as if I had done something wrong by not magically forecasting a sale and purchasing it early without discounts. I don’t want any of my customers to experience that ever.

I very much relate to the part where you mention “The software and the experience are the same all year round. So should be our prices.” Sums up the whole thing really well!

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Georgesays:
Relevant commenter background or experience:Author and co-founder at Pixelgrade
#

Thanks for sharing your story, Paras! I’m glad you figure out a way to move in alignment with your values and drop the discounts when it doesn’t feel right for you.

All of us as creators live in a world where we’re consumers too, and I think it’s valuable to develop a keen eye for how we feel about the services and products that we get and the experience we’ve been through.

Receiving a promotional message with a discount only a few days after I bought a product at the full price is one of the most discouraging experiences I’m having as a customer, especially when the product worked as expected.

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