Hello,
I've just finished @Vigilante awesome INSIDERS progress thread.
He posted a link on pricing strategies which he and @MJ DeMarco would be a MUST READ.
So I've read it, and were really impressed.
Heres the link of the thread:
http://www.nickkolenda.com/psychological-pricing-strategies/#pricing-s7-t22
Since it is pretty long and fastlaners dont have time I would like to write down my notes here.
I explained every strategy fast and sometimes added my personal opinion.
Hope this helps some people.
The article is still really valuable to read (because the author also mentions a lot of different ressources.)
My notes:
The Psychology of Pricing: A Gigantig List of Strategies
http://www.nickkolenda.com/psychological-pricing-strategies/#pricing-s7-t22
Step 1: Determine your Price
1. Reduce left digit by 1. ($19.99 instead of $20)
2. If purchase based on emotion, use round price: $19
If purchase based on rationality, add cents: $19.86
3. Choose numbers with fewer syllables:
$27.82 (8 syllables): wrong
$28.16 (6 syllables): right
Step 2: Influence Their Perception
4. Break down total cost into multiple components, for example $15 product + $2.99 shipping.
If customer compares to your competition he will most likely use your base product cost.
Personal note: be careful with this. Amazon and eBay rank your product better if you offer free shipping. In my opinion this strategy only works on your own site.
5. Offer payments: 5 payments of $99 instead 1 payment of $499
6. Mention the daily equivalence: ($0.49 a day instead $14.99 a month)
Tip: you can also use another equivalence like a cup of coffee a day, or whatever you like.
7. Position the price at the button left on the price tag.
8. Use smaller font size for the prize.
9. Remove the comma, whenever possible: $1499 instead of $1,499
10. If you use language near the price use words like: “low”, “small”, “tiny” instead of “high”, “big”…
11. Use a higher price that must be met on eBay listings in order for the item to be sold.
Personal note: In my experience this doesn’t work. Only inexperienced sellers use a minimum amount to be reached on eBay auctions.
12. Be precise with large prices: 362,798.76 instead of 350,000
13. Expose people to a higher price near you’re your price tag:
If you for example sell an item on eBay for $15 use a box in your template showing other, more example products like ABC: $98 and YXZ: $79
14. Mention any near number near the price. You could for example write: “Join 2,387 happy customers” under your price.
15. Raise the price on your previous product:
Right: old version: $22 New version: $25
Wrong: old version: $17 New version: $25
16. When you make a sale use a smaller font size on sale price and color it green:
Original: Sale:
$49 $36
17. Offer a product that looks worse to make buyers buy your more expensive version:
Web version: $59
Print version: $125
Print and Web version: $125
Step 3: Motivate them to buy:
Uber revolutionized the cap business because they reduced the pain of pay. You don’t do a physical payment (like handing cash to the driver) and there is no visual meter which gets more expensive the more you drive.
18. You could remove the dollar sign on a restaurant menu.
19. If you use a monthly subscription model, charge at the beginning of the month.
20. Don’t bundle cheap and expensive products.
21. Shift the focus towards time-related aspects:
Wrong: We are so inexpensive!
Right: You will love using our product.
22. Reduce the pain of paying using “fake currency” (like poker chips or in game money).
23. Price under $100: use 25% off
Price over $100: use $35 off
24. If you do a discount (not to often) provide a good reason for the discount.
25. Use round numbers on discounts.
$50 instead of $47.83
Step 4: Maximize your revenue:
26. Use more smaller price increases, if you have to increase the price:
Year one: $80 year two: $82.50 year three: $85
27. You can also downsize the height, width, length of a product
Personal Note: Be careful with the 2nd method. If people find out that you downsize your product it will maybe hurt your brand.
AVOID THESE PRICING STRATEGYS:
28. Don’t use bait-and-switch pricing.
Don’t make a great ad for a big discount and tell your customers that you are sold out but you can offer something else (on normal price)
29. Don’t do dynamic pricing:
Don’t offer different customers different prices, based on their location, their willingness to pay, behavior etc.
That’s it.
Additional:
Don’t do A/B testing on price à you can do a survey.
Most important:
Communicating the value of your product and ACTUALLY HAVING A PRODUCT WHICH BRINGS VALUE TO THE CUSTOMER.
EDIT: Forgot to mention that I would really like to hear if you got any additonal strategies for your pricing, which are not in the list.
I've just finished @Vigilante awesome INSIDERS progress thread.
He posted a link on pricing strategies which he and @MJ DeMarco would be a MUST READ.
So I've read it, and were really impressed.
Heres the link of the thread:
http://www.nickkolenda.com/psychological-pricing-strategies/#pricing-s7-t22
Since it is pretty long and fastlaners dont have time I would like to write down my notes here.
I explained every strategy fast and sometimes added my personal opinion.
Hope this helps some people.
The article is still really valuable to read (because the author also mentions a lot of different ressources.)
My notes:
The Psychology of Pricing: A Gigantig List of Strategies
http://www.nickkolenda.com/psychological-pricing-strategies/#pricing-s7-t22
Step 1: Determine your Price
1. Reduce left digit by 1. ($19.99 instead of $20)
2. If purchase based on emotion, use round price: $19
If purchase based on rationality, add cents: $19.86
3. Choose numbers with fewer syllables:
$27.82 (8 syllables): wrong
$28.16 (6 syllables): right
Step 2: Influence Their Perception
4. Break down total cost into multiple components, for example $15 product + $2.99 shipping.
If customer compares to your competition he will most likely use your base product cost.
Personal note: be careful with this. Amazon and eBay rank your product better if you offer free shipping. In my opinion this strategy only works on your own site.
5. Offer payments: 5 payments of $99 instead 1 payment of $499
6. Mention the daily equivalence: ($0.49 a day instead $14.99 a month)
Tip: you can also use another equivalence like a cup of coffee a day, or whatever you like.
7. Position the price at the button left on the price tag.
8. Use smaller font size for the prize.
9. Remove the comma, whenever possible: $1499 instead of $1,499
10. If you use language near the price use words like: “low”, “small”, “tiny” instead of “high”, “big”…
11. Use a higher price that must be met on eBay listings in order for the item to be sold.
Personal note: In my experience this doesn’t work. Only inexperienced sellers use a minimum amount to be reached on eBay auctions.
12. Be precise with large prices: 362,798.76 instead of 350,000
13. Expose people to a higher price near you’re your price tag:
If you for example sell an item on eBay for $15 use a box in your template showing other, more example products like ABC: $98 and YXZ: $79
14. Mention any near number near the price. You could for example write: “Join 2,387 happy customers” under your price.
15. Raise the price on your previous product:
Right: old version: $22 New version: $25
Wrong: old version: $17 New version: $25
16. When you make a sale use a smaller font size on sale price and color it green:
Original: Sale:
$49 $36
17. Offer a product that looks worse to make buyers buy your more expensive version:
Web version: $59
Print version: $125
Print and Web version: $125
Step 3: Motivate them to buy:
Uber revolutionized the cap business because they reduced the pain of pay. You don’t do a physical payment (like handing cash to the driver) and there is no visual meter which gets more expensive the more you drive.
18. You could remove the dollar sign on a restaurant menu.
19. If you use a monthly subscription model, charge at the beginning of the month.
20. Don’t bundle cheap and expensive products.
21. Shift the focus towards time-related aspects:
Wrong: We are so inexpensive!
Right: You will love using our product.
22. Reduce the pain of paying using “fake currency” (like poker chips or in game money).
23. Price under $100: use 25% off
Price over $100: use $35 off
24. If you do a discount (not to often) provide a good reason for the discount.
25. Use round numbers on discounts.
$50 instead of $47.83
Step 4: Maximize your revenue:
26. Use more smaller price increases, if you have to increase the price:
Year one: $80 year two: $82.50 year three: $85
27. You can also downsize the height, width, length of a product
Personal Note: Be careful with the 2nd method. If people find out that you downsize your product it will maybe hurt your brand.
AVOID THESE PRICING STRATEGYS:
28. Don’t use bait-and-switch pricing.
Don’t make a great ad for a big discount and tell your customers that you are sold out but you can offer something else (on normal price)
29. Don’t do dynamic pricing:
Don’t offer different customers different prices, based on their location, their willingness to pay, behavior etc.
That’s it.
Additional:
Don’t do A/B testing on price à you can do a survey.
Most important:
Communicating the value of your product and ACTUALLY HAVING A PRODUCT WHICH BRINGS VALUE TO THE CUSTOMER.
EDIT: Forgot to mention that I would really like to hear if you got any additonal strategies for your pricing, which are not in the list.
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