5 Psychological Pricing Strategies
What is “psychological pricing”? It is the theory that certain prices, or ways of pricing, can predict more sales by their very use. You see these rules in play every day all around you both online and in stores, big and small.
1. “Charm” pricing is a technique where the last digit ends in 9 (or last two digits in 99). You round down from a whole number by one cent, effectively creating $5.99 instead of $6. What marketers have found is that a buyer’s brain will perceive the price ending in 99 to be smaller than the whole number, even though they are essentially the same. So stick with numbers ending in 9 or 99 instead of 0, and theoretically, you will see more sales.
2. Comparative pricing is very simple. It means that you show two or more products that are similar in nature but increase the price of the one you want to sell. Comparative pricing works well with products of similar quality, as the buyer will assign a greater quality to the higher-priced item. It is assumed that, because of the higher price tag, the item must be of a greater quality than it’s more “average” counterparts.
3.Prestige pricing is another fairly simple, and common, practice for higher-priced luxury items. And, it is the opposite of charm pricing. Instead of ending the product price in 99, you round up to 00. $499.99 becomes $500. The thinking behind this strategy is that the number ending in zeros is easier for the brain to process, and therefore an easier decision to make. This pricing structure tends to work very well with products that are purchased emotionally.
4.Color, design, and size of pricing will make a difference in print or online sales pages when highlighting a “sale” price next to a previous price. What’s interesting is that, when this strategy is used, most buyers won’t even care about why the price has been reduced, they will simply feel as if they’re saving money. Presenting the sale price in a larger font with different colors will also help conversions.
5.Buy-One-Get-One-Free, or BOGO, is a strategy widely used to increase unit sales. Based on the psychological greed factor, buyers will see that they are getting something for free, and the sale becomes a no-brainer. This particular technique has lost it’s luster in some markets, so it pays to be a bit creative when utilizing it for your own purposes. You can do a traditional buy-one-get-one, or try a buy-two-get-two, or buy one, get 50% off a second purchase at a future date.
6 Tips to More Sales
Sales is a numbers game – that’s not news to anyone who has been selling for any length of time. Knowing your product, your audience, and the market itself are all important factors in how well your product or service sells. Being a great salesperson takes time and experience. It relies heavily on being able to mirror your prospect so that they feel understood and that they can trust you. There are so many facets to successful sales that volumes upon volumes have been written on the subject.
Here, we’ll suggest six tips that will help you sell and convert more prospects into paying customers!
1. Buying is very often an emotional decision. Learn what is behind that emotion, and offer a solution. Therein lies the key to the sale. Buyers and potential clients will use emotion rather than logic to justify the expenditure, so make sure that you’re playing to peoples’ emotions in your sales copy or sales calls.
2. Customers ultimately buy results, not products or services. Your buying audience is interested in the end result, so reverse engineer your sales process to accommodate that. Start with what they want (the result) and then figure out all the ways what your offer can benefit them, and bring them to that result.
3. Know your customer well. Once you have gained knowledge of very specific details of your customer, figure out where they “are” so that you can be there to find them, and offer your service or product to them.
4. Be able to clearly identify the problem that your intended audience is having, so that you can more clearly define how your product or service can eliminate that problem. When you identify the problem, break it down into emotional and logical aspects. Make sure that your sales copy or sales script addresses those aspects.
5. Develop your USP, or Unique Selling Position. What sets you (or your product/service) apart from your competition? How can you convey that difference to your buying audience, effectively letting them know that you’re the obvious choice? These are all important questions when figuring out what is going to set you head-and-shoulders above your competition.
6. Research price points, and pricing options. Research what your potential customers are buying, what it’s costing them, and how you compare to that. Remember that the value of your product or service is a perception in the mind of your prospect, not a hard-lined absolute. If your prospects perceive your offer as having more value, they will pay more for it.
Remember to check back soon for Issue 3 on this topic.