On other occasions we have talked about the importance of certain elements linked to the price perception by potential customers. Hence, it is necessary to take into account multiple psychological factors when pricing. The presentation of the figures and the image of the price are only two of these factors that directly influence the effect caused on the consumer. Similar to these there are many other techniques that can be implemented to fully exploit the possibilities of selling each product.
The psychology of prices is one of the most studied areas by pricing experts and marketing strategists. In fact, it is part of one of the most innovative trends in this field: neuromarketing. When it comes to getting a sale, user perception is everything. Of course, the price is a fundamental part of this. Most of the resources in pricing psychology are focused on making the prices of your online store appear lower, thus motivating potential customers to make purchases. However, these same techniques can also be used to attract more users with other perspectives, such as the emergency call or benefits included in the price.
From this point we will make a list of 36 tricks and good practices that will allow you to use psychological pricing tactics in your ecommerce, grouped by the type of element that each action affects.
Psychological prices according to the figures
Modifying aspects of prices based on the figures they show is one of the classic practices of both physical and online sales.
1. Reduce the number of integers by one, or more, points. €5.00 or €4.99? This is one of the most used techniques (and the most abused) in the entire field of retail sales. Few businesses can be found that use exact figures to reflect their prices, especially when they are not too low. Fashion stores, technology, major sports brands, etc. Reducing the total price figure has achieved in all these sectors arouse the illusion that the price is even lower. It is the human brain has the ability to easily memorise the leading figure, which, in the face of the question asked, each potential customer will identify the price of our ecommerce as being cheaper when compared to the competition
2. Remove commas from complex figures. Simplifying the presentation of longer prices helps them to be perceived as cheaper. Eliminating the commas of the figures from the thousands will shorten the impact on the client. This is a technique that is used, especially in English speaking countries, where numbers with thousands can be read two by two. Extra TIP: This is an important change to take into account when keeping prices in-line in an international strategy.
3. Reinforce the cheap component of your prices with written prompts. Some eCommerce’s choose to accompany the price of their products with the advantages that it includes. In these cases, it is best to find a way to highlight the factor that reinforces the "cheap" component of each. For example, instead of highlighting the ‘premium’ quality of a product, pointing out that it has ‘minimum’ maintenance will reinforce the idea of the lowest price.
4. Value the inclusion of costs and expenses in the price. This characteristic is as personal and intrinsic to the market as its culture. This means that it is an aspect that needs the use of an a/b test to check which is the best option. In any case, we would be talking about two options: enter a lower unit price + cost per shipment, or reflect a total price with all expenses included. Giants like Amazon opt for the first option, but in other eCommerce’s where shipping is standard over the total purchase, it will be more appropriate to reflect the total cost once the sale is finalised.
5. Divide prices into instalments when financing is available. If the purchase of your products can be financed, or maybe is the default payment method, highlighting the cost of each instalment may be more attractive than the total cost, at least in the first instance. Of course, do not try to cover-up what the final price of the product will be, since the user will understand it as a bad practice and possibly an attempt to deceive. Make it clear that the price you are seeing is only that of one of the deadlines.
6. Stipulating a daily price for services. Along the same lines as point 5, the tactic of showing a price as a daily cost reduces the overall cost perception. With this new dimension, the user relativises the impact of the purchase on their daily economy, significantly reducing their sense of spending. This tactic is used, above all, when selling services, but can also be transferred to the cost of using an appliance or even the price per cup in coffee or tea, etc.
7. Avoid rounding up higher priced articles. Whole figures are more likely to be studied and compared with other market alternatives. The fact that your price is detailed helps users to feel like they are opting for a fair, measured to the millimetre, price and that you are offering the very best possible deal.
Take into account the price presentation
The design of an ecommerce is one of the vital points that help make it work, and this also includes price presentation.
8. Smaller decimals. Displaying the decimals part of the price in a reduced font size helps the user set their sights on the unit figures, reinforcing the idea of the lowest price promoted in our first tip.
9. Choose the right size for each price. In the same way as with decimals, the presentation of natural and discounted prices is key. Although a price of an un-promoted item must remain in line with the rest of the elements that surround it, presenting a discounted or discounted price in a larger typeface, or occupying a prominent position, is essential for it to be engraved in the memory of your potential client.
10. Locate prices in the right place. Where should you place product prices? Where is the user most likely to look? Usually, this question has a clear answer: most users fix their gaze on the right side of the screen. However, in western countries reading starts on the left. How does this affect prices? According to various studies, lower prices are perceived as cheaper the further left they are presented. As for more complex prices, if they are placed on the right, there is a shortening effect on the total figures that make the total perceived as more economical.
11. Show the original reference price on special offers. If the buyer does not perceive what the savings will be, he is less likely to make click-through to purchase. Making clear what the previous price of each product was is key to understanding the current purchase benefit after discounts.
12. Discounts should always on the right. Here reading from left to right does have an influence. If you show the reference price, the final price should be the one that we see last, the one on the right. Thus, the potential buyer will look at what he was going to pay before, he will dismiss it, then get the cheaper price boost he will pay now.
13. Use multiples of your price to enhance its advantages. A priori, this technique can be labelled by many as something ethereal. However, nothing is further from reality, multiple researchers in neuromarketing and perception have extracted that when the price of the product reflects certain benefits listed by their own multiples, it is perceived as being fairer. For example: an aesthetic centre offers a massage voucher for a total price of €300. What is included? 5 x 60 minute sessions. 5 x 60 = €300. It is understood that the cost per session / minute is more than justified, right?
14. Take care of the rounding. We already said at the beginning that rounding is a sensitive issue and that it depends greatly on the price it will represent. Rounding up to €2.00 in superfluous or retail purchases is not the same as approaching €2,000 for a laptop. According to marketing specialists, the difference here also lies in the concept of purchase. When it comes to an emotional and impulsive process (the purchase of common goods, an article of clothing, etc.), rounding without decimals can be a good option. However, when it comes to a more conscious, studied decision, with a greater economic implication (a holiday, a car, a high-value technological product such as a computer or smartphone), it is preferable to opt for the option of a detailed price.
15. Show the price in a timely manner. Here the big difference lies in the type of product for sale and the factor that stimulates the purchase in each case. In the luxury sector, it is the product itself and its characteristics that motivate the purchase. However, in more affordable stores, the purchase decision is more likely to be driven by the price itself, leading to more comparisons between different offers and various sellers. In the first case, it is especially interesting to leave the price for the end, first highlighting the product’s benefits. Meanwhile, in the affordable store getting the price into the open as soon as possible is recommended.
16. The psychology of colour. Establishing what range of colours come into play, with price representation becoming essential in order to be more attractive. Apart from the colour palette used in each eCommerce, it is important that there is a clear and direct association between the products promoted and colours generally understood as being positive. Thus, green is an optimal price, gold for premium versions or outstanding offers and red to generate urgency are three good starting points.
When prices correspond to discounts
The importance of showing promoted prices differently so that they are easily recognisable by buyers has already been discussed, but there are other factors that can improve the conversion of products on offer.
17. Go from value to percentage. Is it better to save €2 or 20%? Especially on products with lower prices, the percentage is a high-value resource for highlighting the elements of your promotion. In addition, it helps the user to better compare the offers regardless of the economic value that they will eventually imply. Extra TIP: this rule works great with prices below units of 100. When the price is higher than this amount, the currency savings are usually more attractive.
18. Explain where the discount comes from. Some studies have confirmed that when sellers make clear what the discount is due to, the user is more prone to purchase thanks to the transparency of the final price. Days without VAT, absolute discount on Black Friday, cost reduction by the supplier... Knowing the reason will also help the potential buyer to be aware of fleeting offers.
19. Round off the discount whenever possible. In terms of savings, lost decimals and half figures appear less attractive than whole numbers. Choose multiples of five or ten, round the offer so that the perception of difference is greater. Sometimes, even if the price difference is greater, giving the detail of the decimals, being a longer figure, gives the impression that it is a higher price.
20. Program your promotions and discounts at the beginning of the month. If the offers arrive when pockets are fuller, they will become a new reason for spending. With this action we ensure a higher level of purchases along with an almost zero sense of guilt against the monthly budget.
Compare your prices with the competition
For the vast majority, comparisons are odious. The truth is that they help, very much, to make the difference between your online store and the rest of the market. Encouraging one's own image against the competition is a step of help for the potential client.
21. It presents the margin of improvement your price has with respect to the market. Even though your product does not have to have a specific discount within your own eCommerce, if it has a lower price than usual in the market do not hesitate to highlight that. Add to your plot the price percentage of savings that the potential customer obtains buying in your store rather than in any other store.
22. Place the cost of urgency against a reservation. When the price of the product may vary depending on the type of purchase, show what the difference is in each case. For example, in the travel sector you can shuffle different costs for the reservation of a place on a tour or its direct purchase. When the reservation has a higher cost, the user is more likely to pay a little more than he ‘deserves’ for the automatic purchase.
23. Highlight the advantages of your product over the rest. As much as we wish otherwise, for the buyer the price will always be unbalanced with the product, they will always want to pay less. How to stand out from the rest and convince them our price is the best price? Highlighting the benefits that make our product unique is a good strategy. As long as the user understands that the raw materials of a product or its quality are intrinsically the best, they will be more willing to pay the price ahead.
24. Surround your prices with other, higher, numbers. What can other numbers influence if not prices? The comparison itself will make the price of your product be perceived as lower if accompanied by other higher figures. For example, the number of buyers who have visited your website, the number of users who have already purchased that product... Messes with your brain.
Fit each product into the catalogue
Each of the products in your online store must take its rightful place in the global catalogue. To decide what is optimum, you can make use of different factors and elements, but you should not forget everything that concerns the price.
25. Order products from expensive to cheapest. The sales opportunities are greater when the products are ordered, by price, in decreasing order. Why? The decrease in price makes the user more likely to select any of those that are not far from the most expensive (understood, therefore, as being of better quality), thanks to the existance of a reference price. This is a mental calculation which considers the value of the main elements of the list. This, along with the repetition of the same buying patterns, helps improve the average order value.
26. Organise prices of the same product according to purchase format. There are different ways to buy the same products or services, each of these options can have a different price. This is very common with subscription prices or the purchase of product packs. Showing the price of each alternative allows users to compare and decide which is most convenient for them. There are already studies that confirm that when presented with a small price difference, the user prefers the product with best value, since he understands that he will be compensated by its benefits. Even if this alternative involves some extra cost for your online business, it will increase the ROI for higher category products.
Reduce the impact of spending
In the same way as with figures, there are other elements about prices that can make purchasing an item more accessible, eliminating any psychological barriers that involve awareness of spending.
27. Show the price without currency symbols. In the absence of economic awareness associated with the price, the impression of expenditure is significantly reduced. The fact that the symbol for the Dollar, the Pound, Euro or whatever corresponding currency, is directly displayed, causes a feeling of uncertainty and guilt in the potential client that is cancelled when the price is only represented by a mere figure.
28. Value factors other than the price. Take advantage of primal feelings and highlight the benefits of buying a specific product. Time is one of these prominent factors, since comfort and easy life make it one of the most moving features before a purchase. Instead of highlighting the economics of the offer, it also favours the temporary aspect of your purchase: quick and simple, the benefits of my product in the blink of an eye.
29. Facilitate prepaid option. To this day, this is already a characteristic common to most eCommerce’. In principle, the products purchased will not be sent until payment is successfully processed by the store. However, this is especially relevant with the sale of services, which do not have to be paid in advance. The psychology of prices warns that demanding payment in advance leads users to focus on wait for the product to be delivered and the benefits they will receive, and not on a future economic charge.
30. Discount packs on the most inspirational element. In the same way that emotional purchases are most likely to be less effective if the user submits the decision to review, granting these elements of discount for a pack will reinforce the idea of added benefit within the set. For example, in a health & beauty pack, associating the discount to perfume, gel and relaxation products will make the purchase much more attractive than if it is placed on the practical side, a sponge, a brush or a towel.
What if you sell through a platform or marketplace?
Sales techniques in marketplaces are already known to be the most varied. They have their own idiosyncrasies and, perhaps, could be treated as a separate set of rules altogether. However, there are many things that they share with the psychological pricing strategies of any other eCommerce, so they can also be included in this practical guide. Let's see what resources can be used in these cases.
31. Affects the prices of other products. The presentation of products with more expensive prices in a marketplace can help the selling price of the item being consulted to be perceived as lower. This, a priori, may seem an unrepresentative factor, but it helps to contrast the prices of both products. Thus, for example, in an online supermarket (or through the marketplace itself) it is advisable to recommend a bottle of a medium-high cost wine next to a snack. In this way, we will get two benefits: 1. the price of the appetiser will seem infinitely cheaper than prior to the comparison, and 2. We will be offering a much more attractive tandem offer.
32. Highlight the price per pack in the appropriate order. Is it worth more to highlight the price or the number of units included? Check what the direct benefit is to the customer and clearly reflect this on the price displayed. Extra TIP: if the number of units is greater than the price, start there.
33. Use dynamic pricing, more is better. This means that if price changes in your eCommerce plot are more frequent and varied, the potential buyer will have less perception of the existence of changes, and you will even be able to raise your prices fairly gradually without losing sales. Moreover, they are probably maintained with the same naturalness with which the price has been rising and, therefore, increasing revenues with sales. With this you will avoid desperate price increases after a bad run or when the launch of a product has not gone too well.
In addition to these psychological pricing strategies, there are thousands of other options that you can carry out to optimise your pricing strategy and, by extension, the benefits of your online retail business. However, there are three points that we need to highlight to boost prices and their effects within your store.
34. Avoid cross selling lower value products. On multiple occasions, accompanying one product with another can be more of a barrier than a push to assist the decision o purchase. And if the secondary product is of a much lower value, it can subtract from the importance deserved by the similar product. Let's run away from the “gifts” that are comfortable and unsatisfactory and give each product the value it deserves. The purchase will be fairer and the printing of the price will not be diluted by inefficient products.
35. Refer to the benefits of the product whenever possible. The less we talk about money, the better. At the end of the day, what you want is to highlight the capabilities of the product or service to meet, or exceed, the expectations raised by the buyer. Give the price the place it deserves, but as naturally as possible.
36. Play with price customisation. If you carry out a personalised pricing strategy, do not hesitate to pull tactics that bring you closer to each of your buyers. For example, using prices that end in the same figure as your telephone number or that equals the letters of your name or age can bring you much more than one-off benefits. This has also been demonstrated by other studies in which tests were carried out with prices that had the same figures as the buyer's ID number or their social security number.