Do you want to know how you can boost sales with minimal effort? Psychological pricing can convince your customers that they’re getting a much better deal, and can help you make money.
Pricing is a make-or-break element of selling, and it’s something many store owners struggle with. Charge too much and you risk losing customers, charge too little and you end up broke.
Psychological pricing can help you hit the sweet spot: it’s a marketing strategy based on the theory that customers respond more to certain prices than others. The four tips in this article will help you price your products so well that customers will have to look twice.
It’s the oldest trick in the book, and it works. Charm pricing is when the price of a product is rounded down by one cent. Even though one cent doesn’t make a lot of difference (we know rationally that $9.95 and $10.00 are virtually the same), the human brain perceives products that cost 1 cent less as costing $1 less.
This only works if the dollar value is dropped on the left side. For instance, $5.50 and $5.49 feel like the same number, but $5.00 and $4.95 feel vastly different.
A study on women’s clothing by the University of Chicago and MIT find that customers prefer products ending in 9 over those which are cheaper but have whole numbers as prices. They sold a product for $34, $39 and $44: and despite there being a cheaper option, the bestseller was the $39 product.
Using charm pricing you can make your products look like bargains: even if they’re only a cent cheaper than they were.
While charm pricing works a treat for those hunting for bargains, some customers are looking for products which just make them feel good. For some luxury items, and products in higher price brackets, prestige pricing may be your optimal strategy.
Prestige pricing is the opposite of charm pricing. Instead of dropping a cent from a round number, prestige pricing calls for rounding up an odd number into a rounded one: i.e., $49.99 to $50.
A study in 2015 identified that customers were more likely to buy a bottle of wine at $40, than $39.72 or $40.28. This could be because the cognitive load of rounded numbers is lower: they’re easier to read, they give a feeling of value and prestige, and for a lot of people they simply ‘feel right’.
If you’re struggling to choose between prestige and charm pricing, examine your products and customers. Who is most likely to buy from your store? Someone looking for a bargain, or someone who wants to show off a little?
Using charm pricing you can make your products look like bargains: even if they’re only a cent cheaper than they were.Click To Tweet
In two for one deals customers pay full price for a product in order to get a second one free. This strategy works because people are greedy! They come across a buy one get one free deal and they’re tempted to buy simply because they want a free product.
Because this strategy is so widespread you might have to get creative in how you present it. For instance, you could offer discounts on future products if a specific product is purchased, for instance, buy one get 25% off next time.
No matter how you twist it, people should feel that they’ll save money by buying your product.
Whenever you have a sale, make sure to highlight the previous price of your reduced products. In order for this to be truly effective, change the font, size and colour of your new price. Visual differences will trick customers into thinking there is a larger numeral distinction!
By visually seeing the drop in price customers will feel like they’re getting a great bargain. Don’t drop the price by too much: for instance, no more than $10 for most products, or customers will begin to question the value of the product.
When it comes to pricing, think smart. Remember that your customers have different needs and wants, and play your pricing strategies in a way that triggers them.