Your Data-Powered Guide to Discounts on Black Friday and Cyber Monday

By Gerry McHugh, 08 Oct 2017, in guide, Black Friday

Black Friday is best known for its chaotic scenes in malls all across America, but it’s also one of the busiest day of the year for software sales!

Knowing what promotion to offer isn’t always easy, that’s why we’ve looked at millions of dollars of software purchased via Paddle and come up with a very practical guide to Black Friday and Cyber Monday discounts.

You’ll learn:

  • Whether you should offer a discount at all (spoiler alert: you should)
  • The ideal discount - should you offer 10% or 50%?
  • What works well at each price point - from a $5 consumer app, to a $300 software solution
  • How Black Friday and Cyber Monday impact different software categories
  • How you can apply these insights and setup each with Paddle in just 5 minutes

Should I offer a discount during Black Friday and Cyber Monday?

In short, you probably should.

We’ve looked at historical performance of hundreds of software companies over previous Black Friday weeks. Even though most companies see an increase in both orders and revenue without any special effort, those who offered a discount sold significantly more than those who didn’t.

Software orders grow 4x (+90% vs +23%) - but there’s an even starker impact on turnover, since revenues grow 6x more with a discount than without (+42% vs +7%).

What’s the ideal discount?

We just saw that offering a discount was generally a good idea: however not all promotional efforts are born equal. The 30-50% discount range performs significantly better, typically doubling revenue in our analysis.

Although offering a lower discount may feel like a calculated risk, customers tend to react much more timidly to these. This means that instead of convincing new customers to give your software product a chance, you end up giving a small discount to people who would have purchased it anyway - in essence, cannibalising your own sales.

On the other hand, large discounts have a clear impact on undecided customers - but giving too large a discount will be counter-effective for your revenue. We see that discounts above 50% only work for a small number of products.

What’s the ideal discount for my product price point?

The highest discounts work best for products that are either fairly cheap (<$10), or relatively expensive (>$50).

This is explained by the fact that small discounts on small amounts make little difference to a user (saving $20 off $100 feels like a much more generous discount than saving $2 off $10, despite both representing a 20% discount).

At the other end, price can play a much larger role in the decision making process and a larger discount may remove a lot more friction.

Product price Best discount
< $15 30 - 35%
$15 - 30 15 - 20%
$30 - 50 15 - 20%
$50 - 100 20 - 30%
> $100 30 - 40%

Are all product categories similarly impacted by Black Friday and Cyber Monday?

No, your results will depend on the type of software you sell.

Black Friday and Cyber Monday sales tend to work particularly well for 2 kinds of products:

  • Products that lend themselves well to impulse purchase: discounts provide a reason for customers to engage with your product, increasing awareness and encouraging purchases
  • Products that are hunted down by savvy customers: these tend to be specialist products, often for developers or designers

This explains why computer repair & maintenance, web development and photography see much larger growth in volume compared to other product categories.

How should I implement discounts?

There are 2 main methods to implement a discount: either reduce the price charged, or create a coupon. Although both are possible with Paddle, we recommend using coupons:

  • Tracking: performance tracking, whether on the advertising side (how many clicked?) or on the ecommerce side (how many bought?), is typically much easier with coupons
  • Administration: issuing coupons and distributing them around tends to be simpler
  • Control: coupons have built-in terms and can easily be limited to a certain period of time, or a number of uses, without any coding
  • Audience engagement: issuing a coupon is a good reason to engage with your customers, and is often less “dry” than a simple price reduction

Using Paddle you can easily implement either solution.

You can create coupons manually in your dashboard, or programmatically via our API (for example to create one-off, personal discount codes on the fly).

Either way, you have a lot of flexibility:

  • Specify the coupon name, or let us generate it
  • Use flat or percentage discounts
  • Make it recur if you’re discounting a subscription
  • Restrict the number of uses if you wish
  • Add an expiration date if it’s time-bound
  • Make it usable on all your products, or select specific product(s)

Black Friday coupon example

Your customers can enter the coupon on our checkout - or you can save them time and increase your conversion rate by passing it to the checkout yourself. For example if you’re using Paddle.js:

<button
  class="paddle_button"
  data-product="518627"
  data-coupon="BLACK-FRIDAY-17">
    Buy Now
</button>

2. Reducing your price

We support checkout price overrides.

For example, if you use Paddle.js, all you need to do is to override the price via a data attribute and insert your authentication token (uniquely generated for this discount and checkout).

<button
  class="paddle_button"
  data-product="518627"
  data-price="9.99"
  data-auth="73a64375d35c366e04c7f393b11cec19">
    Buy Now
</button>

You can also override multiple currencies - the code snippet below shows you how that’d work with Paddle.js.

<script type="text/javascript">
Paddle.Checkout.open({
    product: 508649,
    prices: [
        {
            currency: 'USD',
            price: 5.00,
            auth: '0a1b2c3d4e5f6g7h8i9j10k'
        },
        {
            currency: 'EUR',
            price: 5.00,
            auth: '0a1b2c3d4e5f6g7h8i9j10k'
        },
        {
            currency: 'GBP',
            price: 5.00,
            auth: '0a1b2c3d4e5f6g7h8i9j10k'
        }
    ]
});
</script>

I hope this helps you prepare for Thanksgiving week! Stay tuned for more Black Friday and Cyber Monday insights all along October and November - simply subscribe to our newsletter to receive all of it in one neat email.

As usual, we’re more than happy to customize this advice to your specific products: you can reach us in your dashboard or via the form below.

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