Let’s say that you have a product ready to launch. You have put in all the hard work such as researching or sourcing suppliers. The prices are confirmed and ready to put out there. You have confidence that your product will change the world for your customers and take your business to the next level!
But we have a question for you: have you thought about pricing strategies for your product?
Without a pricing strategy, you are more likely to help your competitors gain more sales. It is important to understand that your customers are often swayed by how your product prices are placed more than the price itself.
Before we share some pricing strategies, it is important to understand your customers and their payment pain points. Let’s quickly put ourselves in the customer’s shoes by imagining this:
You are strolling through the bustling crowds in a shopping mall during the busiest holiday season at the busiest hour. You’re extremely tired and you would like to leave as soon as possible but you cannot leave until you purchase a dog collar.
You come across two posters from different brands promoting dog collars. Both are the same price and have similar quality:
You choose “B”.
Pricing strategies are like psychological mind games you play with your customers. Everyone is looking for the best deal and businesses are constantly competing with lower, more affordable products to make sales. It truly is a headache… which is why we’re bringing you some tips on pricing strategies to make your prices look like a steal!
STRATEGY 1: ANCHORING
This particular strategy comes in many forms. The first step is to confirm which product you want to focus on to make sales. Once confirmed, you can start using this strategy to increase sales.
When placing your product, have a decoy product next to it. This decoy must be similar to your focal product, however, its price must be more expensive:
By comparing how similar the two products are and weighing the price differences, your customers are more likely to choose the less expensive option, increasing the sale of the product you initially targeted.
Now, what if you want customers to buy the more expensive product? What should you do?
The best way to use the anchoring strategy in this situation is to have two other cheaper products. However, the middle-priced product must have a huge price gap with the cheapest product and a narrow price gap with the expensive product. For example, if you are trying to sell large-sized popcorn, you can always do something like this:
Customers will likely choose the large popcorn. This is because the customers believe that they are receiving a great deal as there is not much of a price difference between the medium and the large-sized popcorn.
With this strategy, you can drive the number of sales with a target product that you want to make sales from.
STRATEGY 2: END WITH ODD NUMBERS
We all know the age-old trick of pricing products with an odd number, for example, $4.99 or $4.95, yet, most of us still fall for it. Why is this? It’s simply because it has a compromising effect on the customer. A lower value of the first digit can make a big psychological impact on the customer:
It’s an effective tactic that has been around in the market for a long time for customers to think they are reducing spending costs. It also makes the cost look more specific and exact, making the perception that the product is at the lowest price possible.
STRATEGY 3: REMOVE THE COMMA
With products that start hitting the one-thousand mark, forget the comma. Comma adds more space and lengthens the pricing, making it appear more costly.
A better option would be to shorten it. But wait… How should you shorten the price?
Simply use units to mark your price:
It makes your product seem cheaper without having to change the price or using discounts:
STRATEGY 4: DROP THE DOLLAR SIGN
The dollar sign gives many representations. To a consumer, the dollar sign represents the idea of losing money and their brain associates the sign with pain as we view money as a finite resource.
Many restaurants use this strategy in their menus by eliminating the currency symbol. This also works very well with exclusive and expensive products.
It takes a little pressure off the customer when deciding to purchase a product which can lead to an overall increase in sales!
STRATEGY 5: DIVIDE THE PRICE
Which one seems to be a better deal?
“B” appears to be cheaper although they are the same price. In fact, “B” charges 85 cents more than “A”!
By dividing the price, your customers are more likely to purchase the plan or service your business provides because it appears more affordable.
The first step to understanding pricing strategies and implementing them in your business is to read your customers. In what situation will they be more likely to spend their money on your product and why? By understanding your customers and their values, not only will you increase sales, but you will also boost customer loyalty and repeat purchases.
So drop those dollar signs, divide the price, and make your product seem like an irresistible bargain!