Pricing strategies are used to influence buying decisions. Pricing presentation is used to psychologically guide consumers and position products.
1. Left Digit Effect: Shoppers pay much more attention to the left most digits when comparing and purchasing products. Most people make a choice based on the first digit they see. They tend to not see a difference between $5.99 and $5.00 when making a selection. This is according to a study done by Manning and Sprott.
2. Decoy Pricing: Clients rarely choose the highest price option and often choose a middle priced option. Increase the sales of your higher priced product by adding an absurdly highly priced similar item to your product lineup. You won’t expect to sell many of these premium priced products, but it will increase the sales of your other products which are a deal by comparison.
3. Price Format: According to a Cornell University study on menu pricing in restaurants, guests given the numeral-only menu spent significantly more than those who received a menu with prices showing a dollar sign or those whose menus had prices written out in words.
4. Product Bundling: Buyers will purchase a packaged group of products or services and spend more per transaction than if they had to make individual purchase decisions. Customers assume that bundling goods and services will add value and create economies of scale even if no actual discount exists. Use bundling especially for high margin products such as software or digital products where there is little delivery cost.
5. Anchor Pricing: The anchor price is the fair price for an item in the mind of the consumer. They then compare prices in making their purchase decision. A store that is pricing a coat at $60 that is marked down from $120 is attempting to set the anchor price at $120. Similarly, a sales person presenting three options to a client will present the most expensive option first to create the higher price as the anchor to compare other products against.
Use pricing as part of your digital marketing strategies to increase conversions and increase sales.