Pricing strategy (discounts, coupons) in LLD - Architecture Diagram

System Overview - Pricing strategy (discounts, coupons)

This system manages pricing strategies including discounts and coupons for an e-commerce platform. It ensures that users receive correct price adjustments based on active promotions, coupon validity, and business rules.

Key requirements include validating coupons, calculating discounts, and applying them efficiently during checkout.

Architecture Diagram

User
  |
  v
Load Balancer
  |
  v
API Gateway
  |
  +-------------------+
  |                   |
Pricing Service   Coupon Service
  |                   |
  v                   v
Cache               Database
  |                   |
  +---------+---------+
            |
            v
        Database

Components

User

client

Initiates requests to apply discounts or coupons during checkout

Load Balancer

load_balancer

Distributes incoming user requests evenly to API Gateway instances

API Gateway

api_gateway

Routes requests to appropriate backend services and handles authentication

Pricing Service

service

Calculates final prices after applying discounts and business rules

Coupon Service

service

Validates coupons and manages coupon data

Cache

cache

Stores frequently accessed coupon and discount data for fast retrieval

Database

database

Stores persistent data for coupons, discounts, and pricing rules

Request Flow - 14 Hops

User → Load Balancer

Load Balancer → API Gateway

API Gateway → Coupon Service

Coupon Service → Cache

Cache → Coupon Service

Coupon Service → Database

Coupon Service → API Gateway

API Gateway → Pricing Service

Pricing Service → Cache

Cache → Pricing Service

Pricing Service → Database

Pricing Service → API Gateway

API Gateway → Load Balancer

Load Balancer → User

Failure Scenario

Component Fails:Cache

Impact:Coupon and discount lookups become slower due to direct database queries, increasing latency.

Mitigation:System falls back to database queries for coupon and discount data. Cache is rebuilt asynchronously to restore performance.

Architecture Quiz - 3 Questions

Which component is responsible for validating coupon codes?

A API Gateway

B Coupon Service

C Pricing Service

D Load Balancer

Design Principle

This architecture separates concerns by using dedicated services for coupon validation and pricing calculation. It uses caching to improve performance and a load balancer to handle traffic distribution, ensuring scalability and responsiveness.

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