Pricing strategy (discounts, coupons) in LLD - Cheat Sheet & Quick Revision

Recall & Review

beginner

What is a pricing strategy in system design?

A pricing strategy defines how a system sets prices for products or services, including rules for discounts, coupons, and promotions to attract customers and increase sales.

beginner

How do coupons differ from discounts in pricing systems?

Coupons are codes or tokens customers apply to get a price reduction, often with conditions. Discounts are direct price reductions applied automatically or manually without needing a code.

intermediate

What is the role of validation in coupon application?

Validation checks if a coupon is valid, not expired, applicable to the product or user, and meets usage limits before applying the discount.

intermediate

Why is scalability important in pricing strategy systems?

Scalability ensures the system can handle many users applying discounts or coupons simultaneously without slowing down or errors.

beginner

Name two common discount types used in pricing strategies.

Percentage discounts (e.g., 20% off) and fixed amount discounts (e.g., $10 off).

What must a system check before applying a coupon?

A Time of day only

B Coupon validity and usage limits

C User's favorite color

D Product weight

The system must verify coupon validity, expiration, and usage limits before applying it.

Which discount type reduces price by a fixed amount?

A Buy one get one free

B Percentage discount

C Fixed amount discount

D Free shipping

Fixed amount discounts subtract a set value from the price.

Why use coupons instead of direct discounts?

A To confuse customers

B To slow down checkout

C To increase product weight

D To track promotion effectiveness

Coupons help track which promotions customers use.

What happens if a coupon is expired?

A It is rejected

B It changes product price randomly

C It doubles the discount

D It applies normally

Expired coupons are rejected and cannot be applied.

Which is a key challenge in pricing strategy systems?

A Handling many users applying discounts simultaneously

B Changing product colors

C Increasing product size

D Reducing server memory

Systems must scale to handle many discount requests at once.

Explain how a system validates and applies a coupon during checkout.

Think about the steps from receiving a coupon code to updating the final price.

Describe the differences and use cases for percentage discounts versus fixed amount discounts.

Consider how each discount affects price and customer appeal.

Practice

1. What is the primary purpose of implementing discounts and coupons in a pricing strategy?

easy

A. To reduce product quality

B. To increase the base price of products

C. To make the checkout process slower

D. To attract more customers and increase sales volume

Solution

1. Step 1: Understand the role of discounts and coupons

   Discounts and coupons are marketing tools used to lower prices temporarily.

2. Step 2: Identify the business goal

   Lower prices attract more customers, which can increase sales volume and customer loyalty.

3. Final Answer:

   To attract more customers and increase sales volume -> Option D

4. Quick Check:

   Discounts and coupons = attract customers [OK]

Hint: Discounts attract customers by lowering prices [OK]

Common Mistakes:

• Thinking discounts increase prices
• Confusing discounts with product quality
• Assuming coupons slow checkout

2. Which of the following is the correct way to represent a discount of 20% in a pricing system?

easy

A. discount = 20

B. discount = 2

C. discount = 0.2

D. discount = 200

Solution

1. Step 1: Understand percentage representation in code

   Percentages are usually represented as decimals for calculations, so 20% is 0.2.

2. Step 2: Check each option

   discount = 0.2 uses 0.2 which is correct; others are incorrect as they represent wrong values.

3. Final Answer:

   discount = 0.2 -> Option C

4. Quick Check:

   20% = 0.2 decimal [OK]

Hint: Use decimal for percentage (20% = 0.2) [OK]

Common Mistakes:

• Using whole number 20 instead of decimal
• Confusing 2 or 200 as percentage
• Not converting percentage to decimal

3. Consider this code snippet for applying a coupon discount:

price = 100
coupon_discount = 15  # fixed amount
final_price = price - coupon_discount
print(final_price)

What will be the output?

medium

A. 85

B. 15

C. 100

D. 115

Solution

1. Step 1: Understand the variables

   Price is 100, coupon_discount is 15 fixed amount.

2. Step 2: Calculate final price

   final_price = 100 - 15 = 85.

3. Final Answer:

   85 -> Option A

4. Quick Check:

   100 - 15 = 85 [OK]

Hint: Subtract fixed coupon value from price [OK]

Common Mistakes:

• Confusing discount as percentage
• Adding instead of subtracting discount
• Printing coupon_discount instead of final price

4. In the following code, what is the error that prevents correct discount application?

price = 200
discount = 20  # intended as 20%
final_price = price - discount
print(final_price)

medium

A. Price should be multiplied by discount directly

B. Discount should be converted to decimal before calculation

C. Discount should be added to price

D. No error, code is correct

Solution

1. Step 1: Identify discount representation

   Discount is 20 but intended as 20%, so it should be 0.2 in decimal.

2. Step 2: Correct calculation method

   final_price should be price - (price * discount_decimal), not price - discount integer.

3. Final Answer:

   Discount should be converted to decimal before calculation -> Option B

4. Quick Check:

   20% = 0.2 decimal needed [OK]

Hint: Convert percentage to decimal before subtracting [OK]

Common Mistakes:

• Subtracting integer discount directly
• Adding discount instead of subtracting
• Ignoring percentage to decimal conversion

5. You are designing a system that applies multiple discounts: a 10% seasonal discount and a $5 coupon. If the original price is $50, what is the correct final price after applying both discounts sequentially?

hard

A. $40.5

B. $45

C. $40

D. $42

Solution

1. Step 1: Apply the $5 coupon discount first

   $50 - $5 = $45.

2. Step 2: Apply the 10% seasonal discount

   $45 * 0.9 = $40.5.

3. Step 3: Sequential discounts

   Coupon before percentage discount yields $40.5.

4. Final Answer:

   $40.5 -> Option A

5. Quick Check:

   Coupon then percentage = 40.5 [OK]

Hint: Order of discounts affects final price [OK]

Common Mistakes:

• Applying discounts in wrong order
• Adding discounts instead of subtracting
• Ignoring percentage vs fixed discount difference