1) That shop is ripping you off the rest of the year
2) It was produced to be 50% of the original quality
3) The product is so bad no one else wants it
4) They added 100% to give 50%
Overall production, sales & marketing and overhead leaves any given company with something like 5 to 15% profitability if everything goes well. Some make it to 20% others just breaking even. In other words taking 50% out of a product sales price is mathematically impossible or those companies have to calculate a huge loss.
Now most of those Black Friday offers that would lead to a huge loss are even heavily advertised, which would further increase that loss. That is not likely to happen.
Volume is certainly a good answer – but volume at 50% discount is still a loss if the company is only able to get to 5-15% profitability.Everything above the 5-15% mark would actually kill that company.
Consumers at large are a rather primitive species. Give them a discount sign and they buy as long as there is something on their bank account. Test: go through any grocery store and you will find the following “Specials”: Product X is $2.39 if you buy 3 it is only $7.49 – people buy the tree pack. $2.39 times three is only $7.17 so it would be cheaper to buy three individually but most still buy the pack of three. Why? Because “discounts” don’t address our brain but much deeper in our “Pyramid of needs” the sense for winning something.
a) Nobody knows what the product is actually worth – the discount sticker could also say “At night it is darker than during the day”
b) Produce well understood products with either less quality, less raw material, no packaging…. so that the price in the store can appear as less. But produce it especially for that event
I came across this “great offer” of 200% discount. Hmm – 100% would mean it is free because it is 100% of the original cost. Now 200% would mean I buy it and get the original price for that product payed on top of it. My discussion with that sales person wasn’t very fruitful. It would be the same as I would explain to my dog what the red shift in Astronomy is.