The job of getting our pricing right never seems to get any easier. Just how do you figure out what
Perhaps now is the time to start experimenting in small ways to find a strategy which has the most beneficial effect on your conversion rate.
Why Experiment on Prices?
People's purchasing habits often seem illogical - can we really explain why we choose one (often very similar) item over another? Because of this illogicality, it's worth experimenting to see what works - and doesn't work, with your ecommerce prices. You need to discover which tactic is most successful.
So, could one of the following pricing experiments help your ecommerce business? Test them and see.
Try removing the currency symbol from your product pricing. This usually has one of two effects: either people perceive your product to be less expensive, or they might even be temporarily
You can also try to make the pound sign bigger or smaller relative to the actual price. Once again, these changes may be positive or
The KISS Method of Pricing
"Keep It Simple Stupid" is an extension of the above and it involves removing commas and decimal points. The following prices were shown to a group of subjects:
The first two prices were perceived to be more expensive than the third price. The third price certainly looks shorter! By simply removing the comma and decimal point, you are able to make your customers perceive your products as less expensive.
Also, in the US Journal of Consumer Psychology, researchers found that prices which contained more syllables when read out seemed much higher to consumers.
However, if you are selling exclusive, high-end products you may want to retain the commas and decimal points to communicate a higher value.
Prices Ending in 9
This old chestnut!! Seeing prices ending in 9 is commonplace wherever you shop, e.g. £39.99 or £49.99. Many retailers price their products at £39 instead of £40 just to get this effect.
This isn’t just a myth – prices ending in 9 are even more effective than lower priced products of the same kind, e.g. £39 vs £30 - illogical, yes, but it works.
According to one research study published in Quantitative Marketing and Economics prices ending in 9 were so effective they were able to outsell even lower prices for the exact same product.
Change Your Pricing Typeface
Bold is used to attract attention to a specific word or phrase in a normal paragraph and the same concept can apply to the display of prices.
You can also experiment with typeface – try writing your prices in bold typeface, or, alternatively, removing bold typeface from your prices. As an experiment, try changing the font of your prices to see what works best.
As an example, say a customer is looking for a T-shirt, and you show them related items that are 40% – 50% more expensive than the current item they are looking at. The anchoring of these related items makes their current choice seem a better deal by comparison (even if that's not really the case).
Pay What You Think It's Worth
This pricing experiment might at first glance seem risky but it has shown some good results with ecommerce retailers who have adopted it. It involves letting users decide to pay whatever they want, i.e. what they think the product is worth.
Well, you might be expecting consumers to try and get your items as cheaply as possible but, as it turns out, a lot of users would actually pay more using this method because they believe your product is worth more than what you expect to get.
One advantage of this experiment is that if you allow customers to pay what they want you can take the average figure of what customers are willing to pay and this will give you the most acceptable price for your new product.
Limited Availability Stickers
"Limited stock" stickers are a popular technique used in high street retail but it's a strategy you could implement online too. It creates the perception of exclusivity in the minds of your customers, along with a sense of urgency implying that they need to buy NOW.
This is worth a try even if you don't truly have limited availability.
Pointless Price Points
The Economist once ran an experiment with their subscription prices that has now become famous. They offered the following options to their users:
- an online subscription for $59
- a print subscription for $125
- both for $125
Getting both the online and print subscriptions is clearly the best deal. After eliminating the unpopular middle option The Economist found that the least popular first option became the most popular.
What does this tell us? Well, the middle option was unpalatable as a choice but helped people decide what they most wanted, i.e. it made the last option look like the best deal. This is an example of how your potential customers might not always be logical but
You could think about offering upsell options that could replicate this effect in the hope of getting your customers to find the value in your products, instead of just looking for a deal.
Price Similar Items Differently
According to new research from Yale, if two similar items are priced the same, consumers are much less likely to buy one than if the prices are slightly different.
In one pricing experiment, researchers asked participants to choose or 'pass' on two different packs of chewing gum. When the packs of gum were priced exactly the same at 63 cents, only 46% made a purchase.
On the other hand, when the packs of gum were priced differently, at 62 cents and 64 cents, more than 77% of consumers chose to buy a pack.
Neuromarketing expert Roger Dooley notes that customers may be less likely to delay their decision thanks to the differing prices "...a tiny price difference seems to make the similar products more alike, and increases the probability that a decision will be made and not deferred."
Make Price Comparisons Work for You
A study from eMarketer.com suggests that 38% of people shop online because of lower prices and 27% of consumers will abandon their shopping cart because they have found a better deal.
Focus on why your prices are cheaper, not just that they are.
Esurance offers a good example:
First, they explain why cheap insurance isn’t always suitable, and also have a marketing message that gives customers information on why they can charge less: they were "born online" and raised by efficiency, so the money they save by operating a lean online setup allows them to pass the savings
The Ecommerce Pricing Guide
Pricing for Profit by Peter Hill, 2013
Priceless. The Myth of Fair Value by William Poundstone, 2011