The question of whether to offer discounts is a common one for Australian small and medium enterprises, especially when thinking about encouraging customers to spend a little more – what we call upselling. It’s tempting to slash prices, but it’s rarely the most effective way to boost revenue. We need to analyse this carefully, because a poorly planned discount strategy can actually erode your profitability and devalue your brand.

Let’s be clear: discounts aren’t *always* bad. They can be a useful tool, but they need to be deployed strategically, particularly when linked to upselling. Think of it less as ‘reducing the price’ and more as ‘removing an obstacle’ to a larger purchase. Here’s what we’ve observed works well with our clients:

• Bundled Value: Instead of discounting individual items, offer a discount on a package deal. “Buy the basic package and get 10% off the premium add-ons” is far more effective than “10% off the premium add-ons”. This encourages customers to consider higher-value options they might not have otherwise.
• Tiered Discounts: Incentivise larger purchases with escalating discounts. For example, “Spend $100, get 5% off; spend $200, get 10% off; spend $300, get 15% off.” This directly rewards customers for upselling themselves.
• Limited-Time Offers: Create a sense of urgency. A short-term discount tied to a specific upsell (e.g., “Add a warranty today and save 20%”) can drive immediate action. Just ensure the timeframe feels genuine, not manipulative.
• Focus on Perceived Value: Sometimes, a discount isn’t necessary. Highlighting the *benefits* of the upsell – the extra features, the increased convenience, the longer lifespan – can be more persuasive than a price reduction. We call this ‘value-based selling’.

It’s also crucial to track the results. Don’t just offer a discount and hope for the best. Monitor which upsell offers, combined with which discount structures, are driving the most incremental revenue. This data will inform your strategy moving forward. Looking ahead, understanding customer lifetime value will become even more important in 2026 and beyond, so ensure your upselling efforts contribute to long-term relationships, not just short-term gains.

Ultimately, the key is to view discounts as a tactical component of a broader upselling strategy, not as a default response to slow sales. To get started, analyse your current product or service offerings and identify logical upsells. Then, test different discount structures to see what resonates best with your Australian customer base.