Nowadays, coming up with the right price for your product or service is a lot more complicated than adding 20% to the cost of build and leaving it as that. Everything from the formation of numbers to the symbols you place has a direct impact on conversions.
Whether you sell a product or service, take into account these 5 psychological factors when pricing your next product.
1. Currency Symbols are Pain Points
If you price your product in dollars, euros, pounds or the Japanese yen, removing the currency symbol altogether has been proven to increase conversions. You may have noticed that some restaurant menus don’t contain a currency symbol and use numbers instead:
Source: The Nu School
Studies have shown that consumers feel pain (the pain of spending money) when they see currency symbols which can lead them not to take action and is why restaurants tend to remove them(and make more money as a result).
I personally don’t think removing currency symbols online is the answer, as unlike an actual store, people will visit your website from all parts of the world and not listing the currency will confuse them on the actual price of the product.
What you should do is either replace the currency symbol with words ($ USD, £ = GBP) or reduce the size of the symbol like Mailchimp have on their sales page:
A smaller symbol will minimise the ‘pain’ prospects feel when viewing your pricing plan.
2. Place your Highest Paid Plan First
We read from left to right, and almost all pricing plans online start with their cheapest plan on the left and the most expensive on the right, which we can see again on the Mailchimp sales page:
What would happen if you switched the pricing, showing the most expensive price first? This is known as the anchor effect in the marketing world:
“Anchoring or focalism is a cognitive bias that describes the common human tendency to rely too heavily on the first piece of information offered (the “anchor”) when making decisions.”
How many times have you picked something up you thought was so awesome that you had to purchase it, only to put it down the second you saw the huge price tag? Alternatively, how often have you seen something that costs too, but then find it’s 75% off and purchase immediately?
This is the anchor effect in action. Human beings are prone to placing too much emphasis on the first piece of data they receive. If you offer a number of pricing plans for a product or service, consider taking a leaf out of Crazy Egg’s book and place your most expensive plan or package on the left to utilise the anchor effect:
3. Round your Pricing Plans
A decade ago pricing everything with .99 at the end was all the rage, and actually worked in generating more sales. Today, everybody is aware of the tactic and makes online sales pages look tacky and cluttered. More recent reports state that consumers prefer rounded numbers over decimals, so why not test them both and see what works for you?
More and more businesses are rounding their prices, it looks more genuine and makes sales page look cleaner:
You can see this from Aweber above.
4. Don’t Price your Products the Same
When two similar products are priced the same it can lead to prospects to buying neither. A study conducted at Yale University found that if you price similar items the exact same price, prospects were less likely to convert than if you priced them differently.
In the experiment linked above, Yale gave their test group a choice of picking two packs of chewing gum which were priced the same or to keep their money, only 46% made the purchase. In the second test they increased the price of one packet by 2 cents which resulted in 77% purchasing:
Do you sell several products at the same price point? Perhaps it’s time you mixed up your pricing strategy.
5. Sell your Products Even Higher
The first product I created was an eBook on how to make money freelancing online (I am a freelancer after all). I priced the book at $5 and it sold like hot cakes, then I had the bright idea (after a few weeks) that maybe people were willing to pay more for it?
I instantly increased the price to $9 and the book sold just as well. I tested a few more pricing points but found $9 to be the sweet spot. Are you selling yourself short? If your product offers value, your ideal customer is more than happy to pay its worth.
Consider testing several pricing points to see what generates the most revenue.
Each of the 5 pricing tips I’ve talked about today are easy to implement using an A/B testing tool like ConverThis, which can help you setup analytical tests to reveal how your customers respond to your pricing tactics.
If you’ve never tested any pricing elements on your website, it may be a good idea to get started today, who knows how much you could be losing.