Discounting more than 40% kills trust in your product

It seems backwards. A bigger discount should mean more sales, right? You're giving people more value, a better deal, a bigger saving.

Research tells a different story. Discounts of 60% or more consistently reduce rather than increase sales - particularly for brands that aren't household names and in categories where it's hard to judge quality before buying.

The quality signal problem

Price is one of the main ways people estimate product quality when they can't physically inspect it. A product that's suddenly 70% off triggers an immediate question: why is it so cheap?

The answer buyers land on is usually not "what a generous brand." It's "there must be something wrong with it." Or: "this must be the kind of product that normally gets ignored at full price."

The discount intended to drive urgency instead destroys credibility.

The placebo effect in reverse

Research found the damage isn't just perceptual - it affects the actual product experience. In one study, people who drank an energy drink sold at a steep discount solved fewer puzzles than those who paid full price for the same drink. The low price made the drink work less well.

That's the power of price as a quality signal. It changes what people expect - and expectation shapes experience.

Where to draw the line

Keep discounts at 40% or below unless there's an undeniable, external explanation (store closing, end-of-line clearance, warehouse move). When there's a genuine reason, state it clearly - the explanation protects the quality signal.

For regular promotions, 15-25% is typically the sweet spot. Strong enough to create urgency. Not so deep that it raises questions.

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Research: Cao, Z., Hui, K.L. & Xu, H. (2018). Information Systems Research, 29(3). Erasmus University Rotterdam & Hong Kong University of Science and Technology.