Pricing Psychology: 4 Popular Strategies in eCommerce
Have you ever had such a situation when leaving a offline store the thought creeps in your head that you were deceived and you just “blew up” your monthly budget? Frankly: there must have been! Experienced marketers are on the alert and most likely powerful psychological pricing strategies have worked out against you that made you spend more than planned! Such techniques have long been used in retail, they can also be successfully used in eCommerce. Further in the article, we will consider the 4 most popular pricing strategies that can psychologically affect the buyer and significantly increase the sales of your products. By the way, the psychology of pricing is a much broader concept than prices with the last figure of 9!
1. Offer expiration date
In retail stores you have probably come across ads like “only today, only one day will last a super-sale of products, 70% discounts!” The most interesting thing is that such days of “sharp drop in prices” are held regularly. Thus, an artificial shortage of products is created and offline stores often use this method. In electronic commerce, you can also effectively apply it. So, if buyers think that the time frame for the sale is limited, this speeds up the decision-making process and the seller will be sure that the transaction will take place today and not sometime later.
In addition, people are afraid of missing out on an advantageous offer and this creates a buzz around purchases. You can use this psychological strategy to sell any kind of product, and it works in practice.
There is another way to apply the restriction method. You can change the sales strategy (if it is relevant for your business): positioning the offer as an exclusive product for a certain circle of consumers and falling into this “narrow circle of lucky ones” is a great success. At the same time the value of your product in the eyes of customers increases significantly.
But before applying the restriction strategy you should understand all the risks so that such actions do not harm the reputation of your brand and bring profit rather than a budget damage.
2. The magic of the number 9 - a strategy tested by time
Most buyers and marketers are already fed up with prices that end in "9". And this is not surprising, because this method has been used in offline and eCommerce for many years. The question arises: is it relevant today? Surprisingly, this time-tested strategy still works with a bang. You should agree, the price difference between $ 5.99 and $ 6.00 is only 1 cent, but psychologically the buyer perceives the first amount as the smallest and more profitable. This is because we read the text from left to right, and the leftmost digit in the price is associated as the final amount of the product. In fact by forming a price with an extreme number of "9" you convince a potential buyer that this is a bargain.
3. The visual appearance of the price
The appearance of the price affects the customer’s perception of the value of the product. Once in an expensive restaurant pay attention to the prices on the menu. Most likely they will be typed in small print and without “00” at the end — for example not “21.00” but “21”.
Again, there is a psychological basis for this. Reading "long" numbers takes more of our time, so subconsciously they seem to us higher, although, from a mathematical point of view, these amounts are exactly the same. In addition, such prices seem more expensive also because we, looking at the price tag, pronounce it in our minds and it takes longer than reading prime numbers.
Therefore, we advise you to reduce prices to whole numbers. Despite its simplicity, this strategy really works ... Why not put it into practice?
4. Promotion: buy one product, get a second as a gift!
The psychological basis of this approach is elementary greed. When a buyer encounters such an offer his thinking generates benefits. The main emphasis is on the purchase of products at full cost to obtain a free "bun".
We advise you to be creative and diversify the already familiar version of the promo. Here are some examples you can take note of:
- buy product now and get 25% on your next purchase;
- buy one product and get your choice of any 3 bonuses in the amount of $ 50;
- buy one product and get a second as a gift;
- 1 1=3: buy two products and get the third as a gift, etc.
As you can see, there are a lot of variations for business, while taking into account the benefits for business from such marketing "chips".
We strongly recommend you use discounts and promos correctly! Without a systematic approach and clearly measurable goals they can cause significant harm. If you often arrange big discounts and sales there is a risk that buyers will be fed up and demand more from you. They may get the impression that real prices are too high so you can take the time to close a deal and wait for an even greater drop in prices.
To work out the method of providing discounts as efficiently as possible, we advise you to explain to your customers why you are launching it.
Here are some examples:
- seasonal sale;
- launching a new product on the market;
- sale of balances from a warehouse etc.
It should also be taken into account that the size of the discount can significantly affect the change in your target audience, as a result, affect your reputation and the level of potential income.
An important point! Do not lose sight of your competitors' pricing strategies and the market situation in general. 7-PRICE, an automatic platform for monitoring prices on the Internet, will help you with this. Thanks to this service, you will have valuable and most relevant information, analyze data, without being distracted by the routine, many hours of data collection.
Of course, these are not all strategies in pricing psychology. For you, we have researched and described the most popular ones that can be successfully applied in eCommerce by both vendors and retailers in different categories of goods. We advise you to focus on your target audience and their needs, so you can determine the best methods for your business.