Product Pricing: 4 tips for communicating price in your marketing
In today’s Web clinic at 4:00 p.m. EDT – “When Should You Reveal Price? The 3 principles of presenting price that helped generate a 97% increase in conversion” – Flint McGlaughlin, Managing Director, MECLABS, will use our research to help you discover how to best communicate price to potential customers, and will answer questions such as:
- What is the optimal price range for my type of offer?
- How should I display my price? Round numbers? Fractional?
- When should I reveal the price? Early in the process, or later?
- Is it possible to know I have the right price? Can I test it?
But first, we wanted to learn some pricing insights from the MarketingExperiments community. Here are four tips from Joao Alexandre, Digital Strategist, DesignPT …
Price is a sensible question and it can fluctuate immensely based on perceived value
A customer may be turned off by a low price by discrediting it automatically, especially if it’s a product or service he or she believes is important or has a perceived value. (Editor’s Note: Excellent point, Joao. As Neil Blumenthal, Co-founder and Co-CEO, Warby Parker, learned, “We also found that customers did not trust prices that were too low.”)
If a customer has no idea on professional custom logo design, and sees two different websites that create logos for $300, then the customer will from then on believe that is a fair price for this kind of professional work, until their belief is otherwise reframed by a different source.
Prices ending in “9” may be more appealing than others, which can work better for both low- and high-end ticket items alike
In total, eight studies published from 1987 to 2004 revealed that prices ending in “9” ($39, $2.49, $89, etc.) boosted sales by an average of 24% relative to other prices. In an experiment done by the University of Chicago and MIT, a mail order catalog was printed in three different price points: $39, $34 and $44. The $39 price point won.
Marketers can either reveal price in the beginning or near the end – it depends on the industry and the company
By revealing price early on, you can disqualify a lead that would otherwise consume your time only to conclude it does not fit their budget, while your sales team could focus on other pursuits.
By revealing price later on, you have the opportunity to build value and uncover needs that the customer might not say directly and you would only find out by proper questioning.
It may be possible to know if a company has the right price if you have an understanding of how it operates
For example, if a company sells video creation for $800 but outsources it to $300 freelancers, once you have that knowledge, you can skip directly to the freelancers or approach a company who will produce quality work according to your original price point you were willing to pay.
When Should You Reveal Price? The 3 principles of presenting price that helped generate a 97% increase in conversion (Wednesday, April 24, 2013, 4:00 p.m. – 4:35 p.m. EDT)
E-commerce: 2 benefits of presenting competitor pricing on your website
Pricing Experiments You Might Not Know, But Can Learn From (via ConversionXL)
Priceless: The Myth of Fair Value (and How to Take Advantage of It) – (via BloombergBusinessweek)
Thank you for the mention 🙂
I talked about one of these points in one my Toastmasters speeches. At the time it may have went a bit over the side in terms of interest, because members in my club are not that much into marketing and optimization.
However, for people reading this, do you relate with the info? Have you found that it is true with yourself and your customers?
Its something about the psychology of seeing the numbers. All retailers experiment with the last number and see what causes a product to sell. The ‘9’ seems to be the staple of all industry and probably will remain that way.
Paying a company $800 to pay another person $300 to do the job. Isn’t that how every company works. The company doesn’t call them freelancers, they are called employees. LOL. The price point can always be met if you find the right person to do the job.