Is pricing of products and services a science or a Black Art? I believe it is a science. One which is easy to learn and not as complex as many would have you believe.
In my last article, What is Your Pricing Strategy?, I mentioned how the font you use can make a difference. Well it isn’t the only way to make your prices more attractive.
Here are three more pricing strategies that are easy to understand, learn and apply to your business.
Firstly there’s the one I call Number Facts.
We all know certain things about numbers. They were taught to us very early in life. At school we learnt them by rote. Things like 3 X 4 =12 and 2 X 6 = 12. There’s a rhythm to it we recognise and know to be true.
So if you are going to advertise something as €12, to encourage sales we can improve the number fluency of that figure by adding something like “€3 off our normal price for the next 4 days only”. Of course it has to be genuine but it isn’t the reduction that makes the offer attractive, its the fact that the figures 12, 3 & 4 “feel right”.
The science behind this is explained by Baroody, King and others in various psychological research papers. You can learn more about it in the video below.
Another good way to make things like more attractive is the use the Daily Equivalent Price.
If your price is £900 it sounds a lot of money. But if next to the price is the equivalent price that states “For less than a cup of coffee a day” it sounds a more manageable sum. I often pay £2.50 for a coffee so at £900 this price is slightly less than £2.50 a day over a year.
Gourville is the person that carried out the research on this pricing method and I explain more in the next video.
Lastly in this article I want to mention installments (I have hundreds of more pricing psychology tips so more articles might follow).
Paying by installments isn’t new. But it is still a good strategy. The research this time is by Muzumdar & Sinha. Its well known that people by emotionally and logic takes a back seat. So if you can show the installment price people use that to convince themselves that it is affordable at £X per month whilst balking at the full price. If they really want this product or service they talk themselves into buying it.
I explain more in the last video.
If you want more help with your pricing strategy, or how to make these simple videos using our Videobot, just contact me through StefanDrew.com