8 Reasons why offering discounts isn't a good idea for your digital products

Discounts devalue your product, directly affecting its perceived value and significantly reducing your MRR.

Today is Black Friday—the ultimate discount day.

If you run a business and sell products, you've likely read about the marketing power of discounts. Without a doubt, discounts are one of the most widely used marketing strategies by creators to boost sales.

And yes, they work. But they’re a double-edged sword, and you need to be extremely cautious. In fact, depending on your product, it might not even be in your best interest to offer discounts.

That might sound contradictory, especially since I just said discounts work and can help generate more sales. But the truth is, you can generate much more revenue and attract high-quality customers by not using discounts.

In other words, you can target the kind of customer you want—one who is willing to spend more per purchase—resulting in you earning as much or even more revenue than from two customers buying at a discount.

Recently, I announced that I would no longer offer discounts on any of my products, for the following reasons:

They devalue your product

The price of a product is directly tied to its perceived value.

If your product solves a very specific problem, its value is high—and so is the price it commands.

When price is directly related to perceived value → lower prices mean lower perceived value.

Offering a discount means you're charging less for the same quality product, which sends the message that your product is worth less.

For example, a luxury handbag that is frequently on sale loses its exclusivity, and consumers may start viewing it as an ordinary item.

Additionally, if you later decide to stop offering discounts, you'll struggle to justify the original price. This doesn’t just harm your product—it also erodes trust in your brand.

In essence, you’re signaling that your product is worth less.

They create disloyal customers

Discounts attract buyers who are only interested in the lowest price, not the best experience or product.

These customers care little about your brand values or product quality; they’re just waiting for the next promotion.

The problem is that these buyers rarely become loyal or repeat customers, as their purchase decision is based solely on cost, not the product itself.

When a competitor offers a better discount, those same customers will leave, depriving your business of a solid base of loyal supporters.

What you really want is to build a community—a group of fans who truly support your product.

They erode your profit margins

Lowering the price of a product means sacrificing your profit margins. If you’re not careful, this practice can become unsustainable for your business.

For example, a 20% discount doesn’t just reduce profits by that amount—it may also force you to sell more just to meet financial goals.

However, if you sell digital products or high-margin items without logistical costs, this might not apply to you.

This is particularly challenging for small businesses or emerging brands with high fixed costs. Instead of investing in improving your product or strategic marketing, you might end up fighting just to keep your business afloat.

They attract the wrong audience

Massive discounts tend to attract price-sensitive buyers who are not your ideal audience.

These buyers are more concerned with paying as little as possible than with the quality, experience, or added value your product provides.

If you build your business around such customers, you risk undermining the experience for those who genuinely value your full offering. You could also end up trapped in a price war with competitors.

What truly matters is cultivating a community of fans who love your product—not just because they’re willing to pay your asking price, but because they’re likely to share it with others. If they’re happy to pay full price because they love your product → chances are, they’ll also recommend it to others.

They diminish the perception of exclusivity

When a product or service is constantly discounted, it loses its sense of being special or unique.

If your brand is positioned as premium, offering discounts contradicts the message you’re trying to convey.

For example, imagine a fine-dining restaurant starts offering frequent promotions. Customers might begin to question the quality of the ingredients or the service, undermining the perception of luxury.

Exclusivity is one reason customers are willing to pay more, and discounts directly undermine it.

This is the case with Koala UI. I aim to position it as a premium alternative, and to maintain that status, I must keep its perceived value as high as possible. Offering discounts not only reduces my revenue but also tells my audience that my product isn’t worth its usual price.

Furthermore, it can be seen as disrespectful to my time: This is the cost of creating a high-quality product, and this is the price it should command.

If you’re not interested in buying my product, that’s okay. You’re probably not the type of customer I’d like to have anyway.

They hinder customer loyalty

Customer loyalty is built through positive experiences, excellent service, and high-quality products—not discounts.

Customers who purchase because of discounts aren’t emotionally invested in your brand or its value proposition.

Instead of focusing on discounts, try strategies like loyalty programs, personalized experiences, or exclusive rewards for frequent buyers.

These approaches not only drive repeat sales but also foster long-term relationships with your audience.

It’s also common for loyal customers to subscribe to your newsletter or explore other products you offer.

They create negative expectations

When discounts become a habit, customers start expecting them and avoid paying full price.

This leads to sales spikes during promotions and extended periods of inactivity in between, making it difficult to maintain financial stability. This directly impacts your MRR—exactly the opposite of what you want.

For example, many brands participating in Black Friday face this problem. Consumers wait until that date to buy, leaving weeks before and after extremely slow. This doesn’t just hurt your revenue but also damages the perceived value of your products year-round.

They harm your brand in the long term

Frequent discounts can negatively affect the overall perception of your brand.

Once consumers see you as "the discount brand," it’s tough to reposition yourself as a brand of quality.

Discounts also aren’t sustainable long-term. Giants like Amazon can afford them because they operate on massive volumes and thin margins. Smaller brands, however, risk getting stuck in a downward spiral that erodes trust in their offerings.

So, what can you do instead of offering discounts?

1. Increase Perceived Value: Add bonuses or extra benefits instead of lowering the price, such as free shipping or exclusive content. For instance, in our pricing, we not only offer the Design System but also a bundle with templates and gifts from partners.
2. Educate Your Audience: Highlight your product’s benefits and quality through educational content, case studies, or customer testimonials. We do this consistently—whether through daily content on social media and Dribbble or testimonials featured on our website.
3. Create Urgency Without Discounts: Promote limited-time offers or exclusive editions to drive immediate purchases. Discounts create urgency by pressuring customers to buy before the opportunity ends. Instead of using discounts, use exclusive promotions, like launching a new template available for just seven days.
4. Develop Personalized Experiences: Give customers reasons to love your brand, such as exceptional customer service or personalized surprises. With Koala UI, for example, customers don’t just gain access to the Design System—they also join the Partner Program, which offers exclusive partner perks.

By avoiding discounts and focusing on your product's value, you can position yourself as a strong, trustworthy brand with a loyal long-term market.