20% off or 20$ off, which one is for you?

Team Flowing Horse
2 min readJul 19, 2023

If you are selling a product labeled for exactly 100$, you may actually skip the content below, 20% and 20$ are the same for you.

OK, how about a chair labeled at 99$? Which discount strategy should you choose for better sales? Percentage-based discounts like 20% off, or absolute money-off discounts like 20$ off per 100$ purchased, which one your consumer is more likely to purchase? What if your product is labeled at 120$? or 999$?

First, let’s talk about the rule of 100, which is when the total price is less than 100, percentage-based discounts seemed to be larger than that of absolute numbers at first glance. For example, if the price is 60$, 25% off and 15$ off are the same, but the number 25 is obviously larger than the number 15, so the percentage-based discount is preferred by most of the consumers; if the price is 150$, 33% off and 50$ off are the same, but the number 50 is obviously larger than the number 33, so the discount of the absolute number is preferred by most of the consumers.

You may consider the rule of 100 as the rule of larger numbers. Despite the meaning of the number in “XXX off” being a percentage or USD, the larger the number itself is, the better chance the discount will boost your sales.

Actually, there are some marketing research papers backing the rule of 100. And we found a concept really interesting, which is called perception depth of the discount. We think that there may be a lot of things to draw the attention of the consumers, therefore the brain of the human won’t be able to reasonably react to the discount with a deeper perception depth and will fall back to instinct, like prevailing large numbers. The proper use of the rule of 100 means increasing the perception depth of the discount, therefore increasing the purchase intention. We shall cover more of the use cases of the concept in our later articles.

At the end of this article, if you are hesitating about which discount strategy shall help boost your sales. Go through your past orders, and see if your orders are over or below 100, then you know which one to use based on the rule of 100.

References:
[1] https://www.wondriumdaily.com/the-rule-of-100/
[2] https://www.economist.com/business/2012/06/30/something-doesnt-add-up
[3] https://www.jstor.org/stable/44878779

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