Q4 is here, and you Meta account manager comes calling asking about your Black Friday / Cyber Monday / Holiday strategy. They ask, are you discounting?
Before you slash prices and roll out heavy discounts, let's talk about why that might not be the best move—unless you're chasing quick wins and short-term growth.
The Case for Discounts: Short-Term Gains
Discounts do offer some immediate advantages, especially if you’re focused on quick returns.
- Fast Traffic and Sales: Discounts tend to pull in higher traffic and generate immediate revenue. It’s a quick fix if you need to hit short-term goals or move excess inventory.
- Customer Acquisition: If your goal is to get more people into your ecosystem—especially if you’re just starting out or launching something new—discounts can work as a quick acquisition tool.
- Inventory Clearance: Trying to clear out old products before the year ends? Depending on your needs running discounts here could make sense, especially if you're releasing a new physical product such as an iphone.
Data Insight: According to research from The State of Fashion 2024 Report, brands experience a 15-30% spike in revenue during Q4 sales when offering heavy discounts (McKinsey & Company).
The Cons: Discounts Erode Long-Term Value
Here’s the flip side: customers acquired through discounts often don’t stick around. They’re there for the deal, not your brand. Once prices go back to normal, they vanish. This has a direct impact on your Customer Lifetime Value (LTV)—the amount of money a customer will spend with you over their lifetime.
Data Insight: Customers acquired discounts often have 25% lower LTV than those who pay full price. That means less revenue from each customer in the long run.
Brands relying too heavily on discounts end up with a lower LTV, which stunts long-term growth.
Focus on AOV Instead of Conversion Rates
Instead of chasing conversion rates (CVR) by lowering prices, focus on increasing your Average Order Value (AOV). In Q4, demand is at its highest, and customers are more willing to pay full price, even at premium rates. If you can increase your AOV, you can afford to spend more on ads and still maintain healthy margins.
Let’s do some quick math. If your AOV is $80, and you spend $60 to acquire a customer, your margin is $20. Now, increase your AOV to $95, and that extra $15 gives you room to outbid competitors on ads, capture more customers, and still make more profit.
Why Q4 Is the Time to Maximize AOV
When demand is high, like in Q4, customers are willing to spend more—especially for gifts, subscriptions, or exclusive items. It's the perfect time to push annualized subscriptions or high-ticket items. Instead of running discounts, offer value in other ways—think product bundles, exclusive holiday collections, or annual subscription discounts that lock in customers for the long term.
Data Insight: Customers are 20% more likely to opt for annual subscriptions during Q4, especially when positioned as a special offer that saves them money in the long run.
The Problem with Discounts on Meta Ads
In Q4, ad costs on platforms like Meta can shoot through the roof. And if you’re also offering discounts, you’re reducing your profit margins when you should be making more.
Instead of cutting prices, focus on increasing what each customer spends. The more revenue you generate per order, the more you can spend on ads without hurting your profit margins. If your AOV increases, your ad spend becomes more efficient, allowing you to scale without sacrificing profitability.
The Solution: Bundles, Price Increases & Cart Goals
Here’s what you should be doing instead of running steep discounts:
- Bundle Products: Group complementary products together and offer them as a package deal without cutting prices. This drives up AOV and makes customers feel like they’re getting more for their money.
- Strategic Price Increases: Q4 is one of the best times to raise prices—people are more willing to spend, especially when they're shopping for gifts.
- Push Annual Subscriptions: If you offer a subscription-based product, now’s the time to nudge customers toward an annual plan. You can frame it as a special holiday offer, even though you're locking in that customer for the next 12 months.
- Set Cart Goals: Offer free shipping or gifts for orders above a certain threshold to push customers to spend more, increasing your AOV naturally.
Conclusion: Discounts = Short-Term Gains, Long-Term Pain
Discounts may give you a quick win in Q4, but they hurt your long-term profitability. If you're serious about scaling your brand sustainably, focus on maximizing AOV, optimizing ad spend, and creating loyal customers through higher-value purchases, not bargain hunters.
So this Q4, skip the heavy discounts. Instead, use this high-demand season to push bundles, annualized subscriptions, and strategic price increases. Your margins (and your future self) will thank you.
