Did you know, that shops can’t always discount as much as they would like?

Getting a very good deal on an item you have long desired is satisfying. We can easily spend hours on price comparison sites, hunting for coupons or deals online. With luck and persistence, you might eventually find the deal you were looking for. Have you ever stopped to think, why stores offer discounts at all?

Obviously they want to offer the cheapest price to the customer and get as much business as the can. But how about those -25% or larger discounts, why won’t the retailers simply always sell the product at that price? Usually, when there’s a really hefty discount on a product, there is a special reason behind it. Maybe there’s a newer model coming out, store doesn’t want to carry the product anymore or they simply ordered too many of them and need the money for something else (like payroll). Large discounts are usually the best way to move products quickly.

iPhones are rarely discounted by more than 20%

But did you know, that shops (and especially online stores) can’t always give as big discounts as they would like. There are many reasons. Maybe the brand has a minimum advertised price, maybe price reductions would destroy the value of the product or the store fears that extreme discounts will cause customers to return previously bought units to benefit from the sale.

Some retailers take the risk and offer these discounts, but a growing number of them have started to rely on a site called DealDash to manage the discounting risks. The way DealDash works, is that they host auctions pay-to-participate auctions and sell the products one by one. Now why would you pay to participate in an auction, when the winning isn’t guaranteed? Because all the participants paying for their bids subsidize the price for the winner. That way, someone gets a great deal, way below the minimum advertised price.

Here’s the interesting part, it’s in DealDash’s best interest to make sure most of the bidders find good deals on the site. If no-one would win anything, users would quickly disappear. If however, users on average win good discounts, they will keep returning. The trick is to hedge the bids; participate in 5 auctions instead of one. You shouldn’t expect to win every auction you enter, but the once you win will more than make up for it.

To learn more about DealDash, why don’t you visit their website and sign up?