Knowing all the top tips and tricks is one of the best ways to succeed. And if at the same time those tips and tricks are the ones that are unfamiliar to your competition — even better! In the world of eCommerce, most tricks revolve around price.
Setting the right price for your product or services can be tricky. There are many factors to be considered. Very often it might seem like a never-ending job. But once you define the right pricing strategy the benefits won’t bypass you.
Regardless if you’re an experienced seller or just an enthusiastic beginner, your pricing journey might look like a dead-end street. But, don’t get discouraged so easily! In this post, we’ll show you all the hacks that will make the setting of your pricing strategy less intimidating!
Let’s get started!
1. Create Product Value by Using Price Anchoring
“Anchoring is a tendency where an individual depends too heavily on an initial piece of information offered when making decisions.”
Let’s be honest. In general, we do rely a lot on exterior information when making a decision. It’s no different when it comes to price.
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Psychologists Tversky and Kahneman reveal that people tend to base their estimations by looking at the initial number (an anchor). In other words, nothing is expensive or cheap until we compare it with something else. Therefore, if you come across a pair of $550 jeans, and then also a similar par for “just” $190 it might seem like a great deal! Actually, both pairs are rather expensive, but due to the price of the first pair, the second one will look much more affordable. In this example, the more expensive ones are an anchor. Due to that high price customers are more willing to check out the other pair, and probably buy it! And they’ll think what a great catch that was!
Comparing prices can, of course, be tricky if you compare yourself with the competition. But, you can always show your basic and premium price plans as a comparison. In that way, potential customers will get a better sense of product and its value.
Also, if you’re a brand or manufacturer, then everything isn’t in your hands. For instance, some retailers might try to advertise your product for a lower price than you agreed. This means that they are trying to violate the MAP policy. You need to keep an eye on this because setting the right pricing strategy won’t mean anything if no one adheres to it.
2. The Power of a Bundle Pricing Strategy
It’s no secret that customers want to get their hands on a good deal. When a customer has a feeling that he’s buying something at a cheaper price, he’s more willing to proceed with the purchase. That’s why bundle pricing is so handy.
Let’s say you want to buy a PS4. Of course, the console itself it’s useless without the games. So it makes sense that you want to combine both products when making a purchase. That’s why stores usually offer bundle pricing for products that are naturally connected.
Another similar strategy is called BOGO. BOGO stands for ‘Buy one, get one’. This pricing strategy benefits everyone. Customers love to get something for free, and retailers get the chance to get rid of products that were selling poorly.
However, this pricing strategy doesn’t necessarily mean that customers need to get something completely free. It can include other offers as well. For instance, ‘Buy one, get one 50% off’ or ‘Buy one, get a 30% discount for your next purchase’.
People are willing to buy an item or even pay more than they normally would when they know they get something for free in return.
3. Similar Product s Shouldn’t Have the Same Price
It’s very interesting how the human brain works when it comes to pricing strategies. You would say that it makes sense to put the same price for the same ice cream, just with different flavors. But, the research would disagree. The findings actually show that similar products are priced the same, only 46% of buyers made a purchase. However, when there was a small price change (the price for similar products differed by only $2) the willingness to buy increased up to 77%!
How is this possible?
Well, when the prices are the same, the buyers tend to think less about the product itself and focus only on the price. Conversely, when the prices differ, they have to think about the value as well, and not only about the price. In other words, the customers will start wondering what they actually like more, and is it worth the additional expense.
How strange customer behavior can be, right?
4. Visual Tricks used in Pricing Strategies
People are visual types. That means that you need to use some visual effect when presenting your prices. First, if you have a sale, then provide the new price besides the old, original one. Seeing the price difference makes buyers think that they’re making a better deal and your chances of making a sale rise. The aspects such as color, font, and size aren’t irrelevant either. If for example, the sale price has a smaller font then the original one, it’ll have a positive effect on the customer. It will be perceived as an even better option than it is, and the customer will be pushed into making a purchase.
5. Psychological Effect on Prices
This pricing strategy is also called charm pricing. It means that different numbers have different effects on customers buying decisions. The most effective of them all is number 9.
Why is that the case?
Research shows that people have the tendency to connect the number 9 with the feeling of paying less. In other words, if the price ends with 9, a potential customer has a sense of a bargain, therefore, he’s more willing to proceed with the purchase. There is actually a term “pain of paying” showing that buyers experience some sort of pain when they come across prices that they think are too high.
This is also called the “left-digit effect” meaning that customers find the prices ending with 9 more appealing than whole numbers.
However, this pricing strategy is not so effective in every business. Let’s take luxury items as an example. There the smarter option would be to go with whole numbers (e.g. $2,000, not $1,999.99). Round prices are usually connected with the quality, and charm prices with value. Therefore, rounded prices aren’t for buyers who are seeking value and discounts, but for the ones who are more comfortable with spending the money.
6. Audience’s Money Personality — What is That?
For sure you’ve heard about different types of personality. But, did you know that scientists have found different money personalities? What does that mean?
Well, the findings show that people differ based on the fact of how willing they’re to spend money. Some of them are spenders, while others tend to be more strict with their money.
Obviously, this is very important when creating a pricing strategy. You need to have a crystal clear image of who your customers are and how they behave.
Photo by Fabian Blank on Unsplash
These are the basic money personalities:
The Spender
This type enjoys spending money. They don’t buy things out of necessity, but out of desire. Therefore, they tend to go over the top with their spendings.
The Saver
The Saver is the opposite of the Spender, so they keep a tight rein on their finances.
The Shopper
Shoppers like to spend money as Spenders do, but they don’t tend to be so excessive. They love a good deal and are always in a hunt for a good bargain.
The Investor
Investors don’t make risky moves with their money, and they don’t jump into impulsive shopping. They like to plan their finances and they try to put their money to good use.
Summing it up
As you can see, numerous factors can have a strong impact on your business. Therefore, setting a pricing strategy is not easy at all. There isn’t a magic formula, so the best way to find out what would be the best solution for you is to test it. You should play around a bit with different hacks and strategies. Not all of them will work, but you’ll have a clearer image of what is the best choice for you.
We hope that these hacks will help you achieve that goal. Try them out and share your experience with us in the comments below!