Discounts add a cherry on top of a great shopping experience. But here’s a crucial question: Should you offer fixed amount discounts or percentage discounts? A $20 off brings in more customers, or a 20% off? Many Shopify store owners grapple with this decision, and the answer isn’t always clear-cut.
In this guide, we’ll break down the differences, benefits, and ideal use cases for fixed amount and percentage discounts. By the end, you’ll have all the tools you need. You’ll be able to decide which discount strategy fits your business perfectly.
What’s the Real Difference Between Fixed and Percentage Discounts?
Have you ever found yourself stuck between offering “$10 off” or “15% off” and wondering which one packs the bigger punch? The answer lies in how these discounts work. Let’s break it down simply. We’ll clarify it in a way that makes sense.
Fixed Amount Discounts; No Mental Math
This one’s the straight shooter—simple, straightforward, and great for no-nonsense shoppers. It subtracts a specific dollar amount from the total.
For example, “Take $10 off when you spend $50 or more.” This offer is perfect for budget-smart customers because it spells out exactly how much they’re saving without making them do any mental math.
Percentage Discounts: The Flashier One
Now, these are a bit flashier, offering a percentage slice of the total.
Example: “Save 15% on your entire order.” This kind of deal feels more exciting, especially when the cart value is high. The higher the total, the more they save, making it irresistible for pricier items.
Quick Comparison Table
Shoppers often weigh discounts differently. For example, “$20 off” feels more tangible, while “20% off” creates excitement for higher cart values. Knowing which strategy resonates with your customers is key to driving conversions.
Percentage Discount vs. Fixed Cart Discount: What’s the Difference?
If you’re managing a Shopify store, knowing how these two discounts work can help you craft offers that boost sales while keeping customers happy. Let’s break them down.
Fixed Cart Discounts
Think of these as straightforward deals: customers get a specific dollar amount off their total purchase, regardless of what’s in their cart.
Example: “Get $10 off your entire order when you spend $50 or more.” These discounts are fantastic for nudging customers to hit a minimum spend threshold. Simple, right?
Percentage Discounts
This is where things get a little more dynamic. As mentioned before, a percentage discount reduces the total value of the cart by—you guessed it—a percentage.
Example: “Save 20% on everything in your cart.” Percentage discounts are especially appealing for larger purchases because the savings increase with the cart size.
When Should You Use Each?
Here’s the trick: knowing when to use fixed cart discounts versus percentage discounts depends on your goals.
- Fixed Cart Discounts: These are your go-to when you want customers to spend a minimum amount. For example, “$10 off $50” pushes shoppers to add just enough to their cart to meet the threshold.
- Percentage Discounts: These shine during storewide sales or for high-ticket items. “20% off” can feel irresistible, especially when the savings grow with the price tag.
Templates to Simplify Discounts
Sometimes, setting up discounts can feel like more work than it’s worth. That’s where templates save the day. Here’s how to create both fixed amount and percentage discounts without breaking a sweat.
Fixed Amount Discount Template
- Discount Name: “$10 off orders over $50.”
- Applies To: Specific collections, like summer sale items.
- Minimum Spend: $50.
- Usage Limit: Once per customer.
Percentage Discount Template
- Discount Name: “15% off orders over $100.”
- Applies To: Entire cart or specific products.
- Minimum Spend: $100.
- Combinable: Enable this to let customers stack discounts for even more savings.
Quick Tips for Using Templates
- Be Clear: Choose discount names that are short, specific, and easy for customers to understand.
- Protect Your Margins: Use minimum spend requirements to ensure discounts don’t eat into profits.
- Add a Sense of Urgency: Include a countdown timer to let shoppers know the deal won’t last forever.
Fixed Amount vs. Percentage Discount: Real-World Examples
Examples can make even the most complex ideas crystal clear, so let’s dive into how fixed amounts and percentage discounts work in everyday scenarios.
Scenario 1: Low-Value Products
Picture this: you’re selling a $20 T-shirt.
- Fixed Amount Discount: “$5 off” drops the price to $15. It’s straightforward and feels like a solid deal.
- Percentage Discount: “25% off” also brings the price to $15. But here’s the catch—many shoppers hesitate when they have to calculate percentages.
Scenario 2: High-Value Products
Now, imagine you’re selling a $1,000 laptop.
- Fixed Amount Discount: “$100 off” is a noticeable saving, but for such a high-ticket item, it might not feel all that exciting.
- Percentage Discount: “10% off” also saves $100, but the percentage framing makes the discount feel bigger.
Takeaway: The price of the product and customer perception play major roles in determining which discount type works better. Fixed discounts shine for smaller items, while percentage discounts often win over buyers of big-ticket products.
How to Set Up a “2 for $20” Offer on Shopify
Creating a “2 for $20” deal in Shopify is easier than you might think. Here’s a quick guide:
- Access Shopify Admin: Log in and click on the Discounts tab.
- Create a New Discount: Select Automatic Discounts from the options.
- Set Up Your Conditions: Choose the Specific Products eligible for the promotion. Then set the discount type as a fixed price for two items.
- Test Your Discount: Add the eligible products to your cart and confirm that the “2 for $20” offer applies correctly.
You can take your discount campaigns to the next level with Discounty! It offers more flexibility and advanced features compared to Shopify’s native tools, making it easier to create customized quantity and volume discounts. For a complete step-by-step guide, check this out: Step-by-Step Guide to Creating Discount Campaigns with Discounty.
When to Use Fixed Amount Discounts vs. Percentage Discounts
Choosing between fixed amount and percentage discounts isn’t as simple as flipping a coin. Each has its strengths, and the right choice depends on your goals, products, and audience. Let’s break it down.
Fixed Amount Discounts
Best For
- Low-ticket items: A $10 discount on a $30 item feels significant and motivates buyers.
- Fixed discount budgets: When you want precise control over your campaign costs.
Example Use Case: A jewelry store selling accessories under $50 might see better results with straightforward discounts like $5 or $10 off, rather than percentages that seem minor.
Percentage Discounts
Best For
- High-ticket items: “15% off” a $500 purchase means $75 saved, which feels substantial.
- Storewide sales: Percentage discounts encourage customers to add more to their carts since the savings grow with their total spend.
Example Use Case: A furniture store offering 20% off during a seasonal sale might drive larger cart sizes, as customers feel rewarded for buying more.
Can’t Decide? Use Both!
Why choose one when you can combine them strategically? Offer fixed discounts for smaller items to make savings obvious, and use percentage discounts for high-value purchases to maximize appeal.
Challenges and Best Practices in Applying Discounts
Discounts are a marketing goldmine, but they come with risks. Here are common pitfalls and how to avoid them.
Challenge 1: Discounts Reducing Profit Margins
Discounts can shrink your profits if they’re too generous or applied too broadly.
Solution: Set minimum purchase thresholds. For example, “$10 off orders of $50 or more” ensures you’re still earning enough per sale.
Challenge 2: Customers Expecting Discounts Too Often
When discounts become predictable, shoppers might delay purchases until the next deal rolls around.
Solution: Be selective with discounts. Save them for seasonal sales, store anniversaries, or exclusive events to keep them special.
Challenge 3: Confusion About Discount Types
Unclear discount terms can frustrate customers and lead to abandoned carts.
Solution: Make everything crystal clear. Use straightforward descriptions, such as “Save $10 on orders over $50—automatically applied at checkout.”
Reimagining Discounts With a Smarter Discount Strategy
- A/B Test Your Offers: Experiment with both fixed and percentage discounts to find what generates the most revenue.
- Monitor Performance: Use KPIs such as redemption rates, conversion rates, and average order value (AOV).
- Stack Discounts Strategically: Let customers combine bargains when your margins can handle it, but maintain limits so you don’t cut into profits.
Conclusion
Discounts aren’t all about giving customers a good sale—they’re about providing value to your business, too. Whatever your approach—fixed amount discounts to keep it simple, percentage discounts to add excitement—ensure that your strategy matches the goals of your store and your customers.
Ready to simplify your discount campaigns? Explore Discounty to create smarter, more effective discounts that drive sales without cutting into your profits.
FAQs
Is $20 off or 20% off better?
It depends on the cart value. For some items, such as those priced initially at $100, a 20% discount is the better deal because you’ll pay $20 less. For things priced at $40, a flat $20 discount is much more appealing.
Can I use both fixed and percentage discounts on Shopify?
Yes! Discounty is an example of a tool that provides stackable discounts, such as percentages and fixed amounts, for maximum flexibility.
Fixed amount and percentage discounts profit impact: What’s different?
A fixed-amount discount gives you predictable savings for each transaction, whereas a percentage discount will vary depending on the size of your cart. Evaluate your store's average order value to determine which fits best with your profit objectives.
