Theorem of Lowering the Price, Increasing Demand

Discounting and Tesla are two words you never hear together.

Elon Musk famously wrote in an email to Tesla staff that “There can never – and I mean never – be a discount on a new car coming out of the factory in pristine condition… The acid test is that if you cannot explain to any customer who paid full price why other another customer didn’t without being embarrassed, then it is not right.”

So Tesla’s recent decision to deeply discount across its product range has many scratching their heads. Why is Tesla doing this now? What could it indicate about the state of the business? Will it have a long-term effect on their brand and position in the market?

These are questions we dive into as part of the latest Business Design Jam. In this episode we cover:

• Why a business like Tesla might choose to discount

• The pros and cons of discounting

• 5 considerations before choosing to cut prices

• Why price is so intrinsically linked to UX

• How designers can add value to the pricing process - it’s not all maths!