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Written by Erika Varangouli Senior Content Marketing Manager
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12 Nov 2019  |  Black Friday

Black Friday 2019 Software Discounts Guide

5 minute read

Black Friday and Cyber Monday are two of the busiest days of the year for software sales around the world. Knowing what promotion to offer on your software product isn’t always easy, that’s why we’ve looked at millions of dollars of software purchased via Paddle and come up with a data-led and practical guide to Black Friday discounts.

Black Friday and Cyber Monday are two of the busiest days of the year for software sales around the world. Knowing what promotion to offer on your software product isn't always easy, that's why we've looked at millions of dollars of software purchased via Paddle and come up with a data-led and practical guide to Black Friday discounts.

What we'll cover:

  • Should you offer a discount? (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 can you build your Black Friday promotion with Paddle in just a few minutes?

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

In short, you probably should.

We've looked at the performance of thousands of software companies over the weeks leading to Black Friday 2018. Although most companies saw an increase in both orders and revenue (even without putting in any special effort), those who offered a discount sold significantly more than those who didn't.

Software orders grew 7x (+145% vs +20%) with turnover following a similar trend, since revenue grew 6x with a discount than without one (+120% vs +20%).

Interested in discovering more ways to attract new customers on Black Friday and Cyber Monday? Check out these top tips from our experts.

What's the ideal discount?

Based on the above, offering a discount seems like a no-brainer. However not all promotional efforts are born equal.

Our analysis showed that discounts within the range of 30% to 40% are the most efficient as they can almost triple revenue.

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 may 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 keep in mind that in some cases giving too large a discount may also be counter-effective for your product's perceived value (e.g. if it's positioned as a premium).

Based on our data, we were able to uncover another interesting pattern: Although discounts above 50% ranked third in terms of positive impact on order volumes (behind discounts of 30%-40% and 40%-50%), their impact on revenue growth brought them in second position behind discounts between 30%-40%.

Even though discounts higher than 50% may not work for all SaaS products or pricing models, it's worth considering this option if your offering is suitable.

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.

How should I implement discounts?

There are two 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.

1. Using coupons (recommended)

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)

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, see an example of a $19.99 product with a 30% coupon:

Black Friday Paddle Coupon

2. Reducing your price

If you prefer not to use a coupon and want to offer a reduced price on your product for Black Friday, instead, you can simply use Paddle's Pay Link API. This allows you to generate a unique checkout URL and override your usual checkout pricing in just a matter of minutes.

You can find out more information about how this work on this page.

We know each product is unique, so we would love to talk with you to understand what your goals are for this Black Friday and help you achieve them. Last year, we helped companies like Razeware increase their transactions by 960% on Black Friday! You can reach us via your dashboard or simply contact us here.

Stay tuned for more Black Friday and Cyber Monday tips and insights all along November - simply subscribe to our newsletter to receive all of it in one neat email.

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