Pricing is one of the most important factors in retail business. How to set prices can be a true art form and is often not just a simple case of considering how your costs and making a margin. How the price is displayed on your online store, and price tags in your physical shop can make a huge difference. There are many different pricing experiments you can try to improve your sales and custom. Listed below are 6 interesting and valuable pricing experiments that could have a drastic effect on how your customer perceives the value of your products.
9 is the magic number
Have you ever noticed that many retail prices will end with the number 9? Do you think this is a coincidence? It is not! It is an intentional pricing strategy that plays on the customer’s perception. If you saw two prices of £20.00 and £19.99 which one looks more attractive? Whole numbers generally do not look favorable to the customer! Despite the fact that there is only a 1p difference, the customer will always go for the .99 item! Ensure you take this into account when pricing your goods.
Another pricing perception is the availability of products. Have you ever noticed that some items are limited stock? Or only several items are available for purchase? How about, “must go now, clearance stock!”. In most cases, this perceived low level of stock is purely fabricated. Why? To create a false sense of urgency! If you see that there are only a few items left, alarm bells will start ringing and you will be more inclined to make a purchase.
An important experiment you can try is to alter the typeface of your price. How the actual price is displayed can play a huge part in your customer’s perception. Consider trying both a bold and normal typeface for your prices and see which one has the most positive impact. A less noticeable price may be beneficial as the customer may not take as much notice.
How to display the figure
By figure, we mean the actual numbers and any associated commas and decimal points. This simple annotation can drastically alter how a customer perceives your product’s price. For example, which would you consider to look more expensive – $1800 or $1,800.00? This is the exact same price, however, because of the comma and the decimal point, the second option actually looks more expensive.
How to display the currency symbol
As with the numerical display of your prices, the currency symbol can also make a difference. Statistics show that a price labeled with no currency value at all has a higher chance of being purchased. If a price is simply displayed as 175 instead of $175.00 a customer will pay less attention to it and concentrate more on the actual quality and aesthetics of the item itself.
Price perception through anchoring
Price anchoring is the technique of using other products to lower the price perception of another product. For example, product A is listed at $17.99 on your E-commerce store. When a customer views product A, you could also display suggested products B and C which are priced at $21.99 and $25.99. The customer will notice these prices, and the lower price of product A, and feel like they are getting a bargain.
As you can see, there are many different AB testing methods that you can implement. It is important to remember that these experiments do not have to be permanent – You can simply try out the different methods and see which works best for your products.