Psychological pricing: The powerful tips to increase your e commerce sales
Pricing is one of the most important factors to your business. High price can scare your customers away, while too low one can affect your revenue. Therefore, psychological pricing can benefit your business by encouraging customers to buy your products. You might meet a lot $9.99 product at stores today. But have you ever wondered why it’s .99, not .00? Now we will give you more information and how psychological pricing can enhance your e commerce sales.
What is Psychological pricing?
Psychological pricing is a business practice believing certain pricing can impact customers psychologically. Therefore, some stores set price lower than the whole number. Thus, you can better gain customers attention as well as profit. We will list down some of the benefits of psychological pricing.
Advantages of psychological pricing
You can make customers buy your product without thinking they’re spending too much. Since psychological pricing makes the price lower than it actually is, customers will think they get a bargain and not think much to “click buy”.
You can gain more buyers
Cost is always the consideration to most people. Therefore, low-price can draw customers’ attention and increase the demand. Buyers might think they’ll get a good deal buying your products and thus, you will have more buyers
Easy to implement
Compared to other marketing strategies, psychological pricing is easier to apply. It’s doesn’t require any change in packaging, or product developments. Shop owners can implement the price right away.
You can test different price tactics
Since psychological pricing is easy to apply, shop owners can test many pricing levels to find the right one. The market is always changing, do constant updated data is valuable for shop owners.You will know customers’ reaction to have suitable changes. There is a tip in price setting. If there are too many people complaining about the cost, the price might be too high. On the contrary, if there are no complaints, the price is too low.
Lead customer to specific items
With psychological pricing, you can make customers focus on particular products since low-price seems to appeal more to buyers.
This is often used after holiday seasons or event. For example, after Christmas, there are still some clothes or socks left in your store. To get rid of them, you can set the .99 price, or “ all socks are sold at $1.99”. Customers, then, might be interested in them. Remember you should let customers see on-sale product the moment they visit your online store to gain their attention
Make products appear in lower-cost range
Nowadays, customers will likely to search for different online stores to get the best deal. As a result, there are many websites helping buyers compare prices from different online shop. These website often groups same cost range to make it easier to compare. Using psychological cost can make your product appear in lower price range. For example, price brands for the same products are from 19,000 – 19,999 or 20,000-20,999. Then, ” 19,xxx” products will be grouped together. Then, 19,999 priced product squeezes into lower pricing range and customers will think it costs much less than $20,000 ones.
Compete with rivals
E commerce is a competitive market with new opponents every year. Therefore, shop owners need to remain competitive. Psychological pricing can benefits your online shop more than you think. Customers might think they’re getting a great deal and not spending too much time to consider.
Many companies and shops releases subscription package with free trials. This is a great way to encourage people to use your products.
For example, Shopify, one of the largest e commerce platform, offer 14-day trial package. This will not only allow customers to experience the product before deciding, but also help Shopify to gain more profit. Customers prefer companies let them try the product first to those don’t since they thinks they’re saving money. If customers satisfy with the service, they will continue using it without consulting other brands.
Gain more loyal customers
In a highly competitive market like e commerce, shop owners like getting more loyal customers better than one-time buyers. With psychological price, customers often think they ‘re getting a bargain when making purchase. Satisfy customers will likely to accompany with your business for a long time.
With round number like $10.00, it’s easier to create false bills or paper. Then, using odd number like 9.99 instead can restrict this problem.
Tips to use psychological pricing to
Granted, you might get some understandings about psychological pricing now. So how can you apply it to boost your online store revenue? Now we’ll deliver some tips to help you successfully implement it.
When you browse through online store, you will meet many x.99-products instead of x.00. So what are the reasons behind odd prices like .99
For example, between 9.99 and 10.00 T-shirt, which one would you choose? People tends to read from left to right, and what appear first often have greater impact. Thus, you will see “9” first and think the 9.99 T-shirt costs less while it’s only 0.01 difference
However, this method is overused by many online shops, therefore, it might not have great effect anymore. Hence, many store use .75 or .50 to create greater impact
“ You’ll get what you pay”- this thought always appears in people’s mind. Therefore, with high-priced products, customers might assume they have premium quality. Then, with effective marketing strategy, high-priced products can grant you more sales.
Discount, especially with premium priced products, always appeal to customers. Buyers will assume they get great deal when they buy on-sale products.
There are many forms of discount. You can reduce the price, “ buy one get one free” or “ buy X and get Y with only $1”. To make the discount more valuable, you can add the initial price beside discount price for comparison.
It’s when you get free products or services when buying an item. For example “ Buy X and you’ll get Y and Z that worth 50$”.
Break down the payment
By dividing the total payment into months or days, shop owners can make the price much lower than it actually is. Instalment can change the perspective of customers, make they think the price is more affordable. For example, people will assume $5/ month is cheaper than 50$/ year while the fact is opposite. This method is often used for subscription package like Spotify or Netflix.
This is also known as “ useless pricing point”. It will psychologically lead customers to a specific product
For example, you will get
- Item A for $50
- Item B for $100
- And, item A and B for $100
In this case, item B is the useless pricing point. Customers might think “ why I have to pay the same price to get only 1 product”. Then, they will choose the third one without thinking too much.
The price is defined by the market and how much customers think it should be. Is $40 for a T-shirt is expensive, or $30 dollars for a mobile phone is too cheap. It’s depends on people’s context. Therefore, context matters in price setting
Moreover, where you buy is important as what you buy. Clothes from a name-brand store will be much expensive than those from thrift stores. You should assess your brand, context well before set price
You should allow customers to buy products within a period of time. This will increase the rareness of products and therefore, the demand for it. Customers will afraid they will miss the great deal and won’t have this opportunity again. Thus, they will quickly draw the conclusion.
You can increase the effects of this method by setting a countdown clock on your online store.
When you release limited product or edition, you will want to raise customers demands. Set the number of products left in stock next to the products. Whenever a person visit your store, they’ll acknowledge how many items available. This will create the urgency to buy your items and therefore, increase your sales
Thanks to the expansion of Internet and social media, people can easily know previous buyers’ thought about your products and service. People will assume they will have the same experience like others’ and therefore, value their opinions. Social proof can grant you improve in sales and number of customers. You can click here to learn how to best use social proof to boost your online sales to the next level.
Psychological pricing is very common in online sales these days. We hope to deliver you the overall knowledge and how to manipulate psychological pricing to increase sales revenue. If you want to explode sales revenue, you should contact ArrowHitech
Established since 2007, ArrowHitech has 12+ years in e commerce. We can deliver you great service, from E commerce consulting, to develop Shopify themes and apps. Our company can assess your market to help you set the right price and make it easy to update the pricing instantly. Therefore, we can grant you a dream website and high customer satisfaction. Contact us here or via email firstname.lastname@example.org or hotline : +84 243 7955 813