Advantages and Disadvantages of Discounts

When we go to shopping and when we see the word discount we get excited because discount means shopper would be saving money on items he or she intends to buy. Discount schemes are available round the year however one should be careful before buying discounted products and in order to understand the point better let’s look at some of the advantages and disadvantages of discounts –

Advantages of Discounts

  1. The first and foremost advantage is that it results in extra saving for the consumer, so for example if you want to buy a trouser which cost around $20 but due to some promotional scheme by shopkeeper you get 20 percent discount than you get the same trouser at $16 then this $4 is savings which happened due to discount.
  2. It result in extra satisfaction because as a customer when you go to shopping and in your mind you have certain price which you expect for a product and if you get the product at lesser price than naturally you will be happy and feel more satisfied. For example if you go to buy a pair of shoes and you know that price of shoes will be between $30 to $50 but due to discount you get pair shoes at a price of $25 then this $5 is your extra satisfaction.
  3. Discounts are advantageous to shopkeepers also because by offering discounts they are able attract customers to their shops resulting in more footfalls and hence are able to sell their dead stock which was lying with them resulting in locking of working capital. Companies who are looking for cash and improvement in liquidity give discount offers to their customers.

Disadvantages of Discounts

  1. The biggest disadvantage of discounts is that shopkeepers exploit the mentality of customers towards discounts to their advantage by offering outdated and defective products during discount sale and hence it is the customers who feel cheated or exploited after purchasing discounted products.
  2. Another disadvantage of discount is that shopkeepers usually increase the price of the product and then offer a discount on increased price which means that customer do not get any benefit of the discount. So for example if price of jeans is $40 and shopkeeper first put a price tag of $50 and then offer 20 percent discount then as a customer you will feel that you got good deal but in reality there is no difference between pre – discount and post discount price.
  3. Discounts results in deviation of customer towards products which they don’t originally planned to purchase, so for example if you go to electronic shop to buy LED television but in the same shop they are offering discounts on plasma television and looking at discounted price you are tempted to buy plasma television even though your original plan was to purchase a LED television.

As one can see from the above that there are many benefits as well as limitations of discounts and that is the reason why as a customer you should be careful while making a purchase because many times discounts results in good savings, but there are also times when customer would be better off not purchasing goods on discounts.

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