Retailers will be delighted to know that you don't have to price low to get the customer to buy; but you do have to give your Retail Pricing Strategy context and atmosphere, and understand the predictably irrational behavior of people. Here are: "7 Ridiculously Simple Secrets For Retailers To Price Effectively & Make More Money."* The best thing about "the secrets" is that these simple techniques really work, they have been rigorously tested and documented in the disciplines of behavioral psychology, economics, and market research, appearing in venerable outlets such as the Wharton Business School, Stanford Grad School of Business, Quantitative Marketing & Economics, New York Times Magazine, and Journal of Consumer Psychology.
1) Use "Magic #9". The Number "9" Is Still Magical For Sales.
The research showed that prices ending in the number 9 were so effective that they actually outsold lower-priced goods! The study compared price points such as $39 and $34 for items of clothing, and "the researchers were shocked to find that" the $39 price point actually outsold the cheaper price point ($34) by 24%.
2) Keep Prices Simple. Literally.
The simpler the price sounds, the less overwhelming (and expensive) it feels. Researchers found that prices that contain more syllables when spoken or even read seemed drastically higher to customers. Examples: "$1,499.00"; "$1,499"; and "$1499". Despite the fact that these prices are the same, the extra syllables (and commas) make it feel and sound like a higher cost.
3) Evoke. Evoke Memories Of Experiences With The Product.
Customers had more positive reactions when they were asked to recall past time spent with a product rather than recalling the money they saved.
Think in terms of the golden moon on a hot summer's night under which you drank the iced tea on the veranda, not how much you paid for it at the local store.
A person’s experience with a product tends to foster feelings of personal connection with it, referring to the time frame typically leads to more favorable attitudes—and to more purchases.”
4) Context. Get People to Perceive From The Context That They Should Expect It To Cost More.
How people feel about price depends on the context. e.g. Customers are willing to pay higher prices for the exact same type of wine when it is sold at an upscale hotel than when it is sold from a run-down grocer. This suggests you could raise your prices based on the context in which you frame it, e.g. Fancy, gourmet, limited supply, convenience, snob appeal.
5) Offer More Price Points.
One of the biggest mistakes business owners can make is not offering enough price points. Or, not offering prices that are high enough. Think of "Goldilocks pricing": Offer choices between Regular, premium, and super premium. (NOT high, medium, and low). Take advantage of the fact that many of your customers will be willing to pay a higher price point as long as it offers a premium experience -- as they see it in context with other price choices.
6) Reframe. Reframe Your Product's Value To Reduce Friction With Certain Types of Customers.
Make the customer, especially the resistant or "tightwad" one (24% of your audience), feel comfortable with your pricing by reframing your product’s value, e.g.:
Example 1: Say "$84 per month" instead of "$1000 per year," even though those two price points are actually the same amount overall! We've all had offers made to us, "for just pennies a day" (vs. the total cost per year).
Example 2: Research showed that by simply changing the description of an overnight shipping charge from, “a $5 fee” to “a small $5 fee” increased the response rate among tightwads by 20 percent!
7) Compare. Don't call attention to your prices, and don't ask the customer to compare prices.
Don't encourage your customers to look at your prices -- especially in comparison with the competition; competitor price watch is your job, not your customers'. Research showed that just asking people to compare something makes them suspicious and decreases their trust and confidence in you. And why call attention to the competition anyway?
Bottom Line For Your Bottom Line:
This blog post deals with Competitive Pricing Strategies such as How Retailers Can Make More Sales By Using The Right Pricing Tricks. Be wary of triggering customers to think about a competitor’s price, and instead, sell to customers based on the value of the product. *For full article and citations, go to: 7 Pricing Mistakes That Can Seriously Stifle Sales by Gregory Ciotti in Hubspot. Also see my recent post: The 10 Commandments of Price Optimization that included the most important do's and don'ts of pricing a retailer must know and follow for success.