I'm guessing you want your business to be more profitable so perhaps you should look hard at how you price your products or services – and how those prices are perceived by your customers.
The impact of even just a few small changes in this critical area can be enormous so invest some time experimenting with the following pricing ideas and see how they can make an improvement to your sales.
Print v Handwritten
In many retail environments, the way in which pricing is physically displayed on a price ticket can have an impact on how that price is perceived by shoppers.
If your price ticket is printed, shoppers see it as a definite, accurate price that has been carefully calculated by someone "behind the scenes".
There will be an underlying assumption that some effort has been put into determining the price and producing the labels, so the price is unlikely to change. Rarely will customers question or attempt to negotiate a properly printed pricing ticket.
Alternatively, a handwritten price ticket is judged to be what the price should be and some customers might see it as simply a starting point to negotiation.
A printed price ticket which has been crossed through showing a new, lower handwritten price confers the impression of a bargain offer.
The customer accepts the validity and calculation of the initial printed price but subliminally believes that the person who changed the price is doing them a personal favour by discounting it.
Pricing Colours
According to a study conducted by Dr. Rajneesh Suri and his team from Drexel University's LeBow College of Business in 2013, men respond positively to pricing advertised in red, always perceiving a "sale".
The use of red makes men feel positive and believe that they are being offered a bargain.
On the other hand, female shoppers seem unaffected by a change in the colour of price tags. Women tend to process price data more deeply, recollect old prices, and compare pricing minutely, irrespective of the colour in which prices are printed.
An independent study published in the Journal of Retailing consisted of three experiments in which respondents looked at price tags and ads in different colours and scored them with respect to how much they would save on each item.
In all three experiments, male respondents thought they would save as much as 85% more with items that carried red price tags than those which had black tags.
So, if you're selling products aimed at men, using red for your pricing data might be a good idea!
Text Size of Prices
Consumers are sensitive to the text size of discounted pricing on price tags and product advertisements.
Research has proved that they perceive price to be significantly lower when the reduced price is printed in a smaller font than that of the original price.
The logic is that the size of the text acts as a guideline to the reader's brain. The smaller font for the discounted price tells them that the new price is reduced and much lower than the original price.
The next time you have a sale, keep the discounted price text size smaller than the text size of the original price of the item.
Drop the "£" Sign
Researchers at Cornell University found that the absence of a monetary symbol takes the spending "pressure" off customers' minds, leading them to purchase more.
The very mention of pounds, whether expressed in symbols or in words, reminds users of the expense they stand to incur and makes them hold back their spending. So, avoid using the "£" sign if you can.
The way in which pricing is displayed can have a profound impact on customers' perceptions of price and the possibility that they will make a purchase so experiment with the look and impact of your pricing tags.
Use Different Pricing Vocabulary
There are several ways to indicate price, and each will have a slightly different impact in the mind of the customer.
Price is a clear, unambiguous statement of the amount the customer has to pay. There is no comment on the value of the item or any potential benefit to the customer who is making the purchase.
However, if you use statements such as "current price", "this week's price" or "today's special" you are indicating that the price may go up, creating a sense of urgency in the mind of the customer.
You could use the word "investment" when selling new kitchens and bathrooms (or similar), allowing the customer to consider the price in context with how they will benefit from the new work.
The word "investment" certainly expresses your prices more positively than "cost".
What you are doing is attempting to underline a purported value for money.
You could also be a little more imaginative in your language as to how you present pricing to your customers – get out the dictionary and "play" with words such as "crazy", "unbelievable", "incredible" etc. when describing your prices.
Words have power and you can boost sales with these powerful marketing words:
Sale – this is the "old faithful" of marketing words. While a lot of businesses use the word “sale,” it still has the power to motivate customers because who doesn’t love a good deal?
Off – if you can offer your customers an incentive like “50% off,” or “£10 off your next £75 shop,” you’ll pique interest quickly and give customers added incentive to buy.
Free – "free estimate" , "free gift with purchase", "free to the first 10 customers".
Now – this handy word encourages people to act quickly. Usually “now” is used as part of a call to action. Examples include: “Shop now”, “Act now,” and “Subscribe now.”
Best sellers – customers like knowing what items or services are popular, so creating a list of best-selling products is a great way to capture additional sales.
Be the first – customers like exclusive access. Give your customers a sneak peak at new products and upcoming offers.
Manager's Special Offer – (or similar) builds a rapport between a branch and the customer, suggesting that this offer is a personal one, only available at that location.
Remember – your customers are busy, so it’s always a good idea to send reminder emails. Maybe you want to remind customers about a special price or to use the reward points that they’ve accumulated. For example, “Remember, you have three hours left to redeem your offer!”
Obviously, in order to promote the right image of your business as a whole you must use the most appropriate/suitable words applicable to your products or services.
Experiment With Pricing Numbers
Is it just about the significance of the number 9 or are there other numbers that also give a perception of being great value for money?
A major university experiment in the USA tested the impact of certain prices on customer demand.
Working with a leading mail order catalogue company they offered a ladies fleece jacket for sale with great visuals and a positive schpiel in around 60,000 catalogues.
In one third of the catalogues the price was shown as $44, in another third it was priced at $49 and the last third was priced at $54.
There was random distribution of the catalogues so that three neighbours might each have one with a different price.
The fleece cost the company $20 to buy, so they made either $24, $29 or $34 profit per item.
The results were as follows:
|
Price of Fleece $44 $49 $54 |
Volume Sold 1,000 1,500 1,000 |
Profit Generated $24,000 $43,500 $34,000 |
You will note that the $44 and $54 prices sold the same volumes, suggesting that high or low price had no impact on the sales volumes. The purchase decision was therefore not made on price alone.
Regarding the number 9, all the study revealed was that 9 was a more significant number than 4.
If you were to ask people to score something on a scale of 1 to 10, where 10 is high, the vast majority say 7. The number 7 is a non-confrontational (and therefore powerful) number.
A building firm decided to send out all their quotes ending in a number 7, changing, for instance, a quote that would have been £10,000 to £10,007 instead.
Conversion rates improved considerably and although many customers asked to round the price down by the odd £7, very few argued about the overall price.
Round sum prices undermine the customer's perception that the prices are fair – an item priced at £10.07 will be more attractive to potential customers that one priced at £10.00.
Whether it is more attractive than £10.09 or £9.99 is not so clear cut. Experiment with pricing numbers and you may be happily surprised by what works best for your business.
Make Your Pricing Clear
The way that you express and display pricing can have a dramatic impact on your customer's willingness to pay.
Make your pricing clear and understandable, as well as accurate and believable – and experiment with the ideas mentioned in this post.
Related Posts
Pricing Experiments for Ecommerce Companies
How to Use Decoy Pricing to Increase Revenues
Ecommerce Pricing strategies that Boost Sales
Competitive Pricing Strategies for Retailers
Pricing Strategies that Spark Customer Loyalty
Sock it to Them with Psychological Pricing
Top 5 Pricing Strategies for Ecommerce Sites
The Power of Psychological Pricing
12 Psychological Pricing Techniques
6 Pricing Psychological Triggers that Win Sales
Sources
https://conversionxl.com/blog/pricing-experiments-you-might-not-know-but-can-learn-from/
https://blog.leanstack.com/experiments-in-pricing-d423deb939ac
https://econsultancy.com/blog/62591-why-pricing-experiments-prove-our-assumptions-are-wrong
https://hbr.org/2011/03/a-step-by-step-guide-to-smart-business-experiments
https://www.shopify.co.uk/blog/12109933-5-ecommerce-pricing-experiments-that-will-make-you-want-to-run-an-a-b-test-today
https://alannadybus.wordpress.com/2011/07/22/pricing-experiments/
http://www.verticalresponse.com/blog/20-powerful-marketing-words-phrases-that-sell-or-repel/
Pricing for Profit: How to Develop a Powerful Pricing Strategy for Your Business, Peter Hill 2013