You’re wrong. Some rudimentary A/B testing led me to a counter-intuitive result about e-commerce.
Until two weeks ago I would only show the normal retail price of a subscription on my site. However, if you are renewing or buying an additional subscription you get an automatic discount. People were complaining that they would renew more easily if they knew about the discount (other than telling them in three emails before their subscription expires and writing it below every page listing prices on my site).
So, I implemented a change on my site where it would show you the price you have to pay for a subscription based on your currently active subscriptions and any automatic discounts we give. At the same time I extended the automatic discounts to people buying similar products (e.g. backup software for Joomla!, WordPress and standalone). I was making it cheaper to combine 2 or 3 similar software products and let people know. Now people were complaining that they paid more than they “should”. For example, they paid 40 Euros (full price) for a product but now the price shows as 28 Euros (due to automatic renewal discount)… even though the regular price is also shown on the page and the pricing policy with automatic discounts explained was clearly stated on that page.
Observations from this experiment on displaying discounted prices:
- The number of sales dropped, especially on the product with the biggest discount. I suppose people thought that if I can afford a 40% discount it’s probably not worth buying.
- The income dropped. Due to less and cheaper sales, of course.
- Support requests about pricing issues increased by 1000%. Because people thought that the retail price is the (30% discounted) renewal price.
Conclusion: Don’t give discounts. Charge people more. Don’t tell them about special offers and discounts. Let them believe they’re buying something exquisite. In other words: do it like Apple!
For what it’s worth, I am still keeping renewal discounts but I’m no longer showing them on my site. I know it’s irrational and diminishes my income but I’ll still do it because I think it’s fair. Am I an idiot? Yes, I probably am.