Give Diplomatic Discussion Lower Prices Lead To More Sale

Pricing strategy is difficult and complicated, and there are no shortcuts. When you don’t know where to start, this truth makes “winging it” an appealing alternative for more sale.

However, this is the wrong strategy; clever pricing is calculated. While intuition is vital, getting your hands dirty will teach you more than armchair analysis.

Too many alternatives might demotivate you, so limiting your options can help you avoid “analysis paralysis.” You would think that having the same pricing points for various items is excellent, right? A Yale research found that consumers are less inclined to buy one of two similar goods if their are same price.

 Price Anchoring for Same Sale

As the adage goes, the greatest way to sell a $2,000 watch is to place it next to a $10,000 watch. But why is that? Anchoring is a typical cognitive bias that is to blame. When making judgments, anchoring refers to the propensity to significantly depend on the first piece of information presented.

In a study examining the impact of price anchors, participants were asked to estimate the value of a hypothetical property. They handed out booklets with information on the residences in the area, some with regular prices and others with falsely inflated prices. The brochures with the higher costs persuaded a group of undergraduate students and a group of real-estate specialists. Even pros were persuaded by anchoring!

Placing premium products and services alongside normal alternatives may help customers realise the value, as the cheaper options may seem like a deal.

 Weber’s Law

The just visible difference between two stimuli is directly proportional to the amplitude of the stimulus, according to Weber’s law. In other words, the magnitude of a change is influenced by the size of the change. 

Weber’s law is frequently used in marketing, especially when it comes to price hikes for goods and services. When it comes to price increases, there is no magic figure, but according to Weber’s rule, the average threshold at which people are moved to respond is around 10%. 

Many factors influence price, as they always do. Weber’s law is more of a criterion than a set of hard and fast rules.

Reducing Pain Points for Same Sale

According to neuroeconomics, the human brain is programmed to “spend ’til it hurts.” When experienced pain exceeds the perceived benefit, the limit is achieved. Carnegie Mellon University researchers looked at a variety of approaches to alleviate these pain points and, as a result, improve post-purchase satisfaction and retention.

Make a utilitarian or pleasurable argument. A message concentrating on usefulness is more successful for cautious spenders: “This back massage can relieve back discomfort.” A focus on pleasure influenced more generous spenders: “This back massage will help you relax.”

Either it’s free or it’s not. As Dan Ariely’s book Predictably Irrational demonstrates, the term “free” has a lot of power. In this case, Amazon’s sales in France were significantly lower than those in the rest of Europe. 

The issue was that French orders were subject to a 20-cent shipping surcharge (versus free shipping elsewhere). Pricing correctly involves maximizing value, yet nickel-and-diming might lead to more resistance in the long term.

Challenging a Timeless Tradition

One of the oldest strategies in the book is to end pricing with the number nine, but does it truly work? According to a study published in the journal Quantitative Marketing and Economics, the answer is a loud yes. Even cheaper costs for the same product were able to outsell prices ending in nine.

The research studied women’s garments priced from $35 to $39 and found that prices ending in nine outperformed the lower ones by 24%. The number nine was beaten out by sale prices—”Was $60, now just $45!” However, when the number nine was combined with a reduced sales price, it beat lower price points once more.

Time Spent vs. Money Saved

Why would a low-cost beer manufacturer like Miller Lite use the slogan “It’s Miller Time!” as its tagline? Isn’t it true that they should promote their cheaper prices?  Jennifer Aaker of Stanford University claims that when asked to recollect time spent with a product rather than money saved, people recall more favorable experiences in numerous product categories.

“Referring to time often leads to more favorable attitudes—and more sales,” Aaker adds because a person’s experience with a product fosters sentiments of personal connection with it. 

In an article released by the Wharton Business School, Aaker points out that many purchases fall into one of two categories: “experiential” or “material.” Concert tickets, for example, benefit from the “time spent” message, but designer jean sales profit from reminders of money and prestige.

 Comparing Prices for Same Sale

Chest-thumping about low costs, when done incorrectly, might result in a one-way ticket to low sales. According to a Stanford University study, if there is no context for why prices should be compared, the act of comparative pricing might have unexpected consequences. 

If you invite customers to compare prices, they may lose trust in your message. “Because I asked them to compare, they thought they were being misled,” as the researcher said.

The Power of Context

Is there ever a point at which one Budweiser is more valuable than another? No, according to logic, but bar hoppers know this isn’t the case. How much you spend is influenced by where you shop. 

Customers were ready to pay a greater price for a Budweiser if they thought it was coming from a fancy hotel rather than a run-down grocery store, according to economist Richard Thaler. Thaler claims that context was the obvious answer here: the luxury hotel’s perceived reputation permitted them to charge greater charges.

Consumers will pay extra for a “multimedia course,” even if the material is the same. A product’s narrative is important since perception affects whether a price is fair. It’s painfully clear, yet founders who fail to position their goods frequently overlook it.

Different Levels of Pricing for Same Pricing

According to professor William Poundstone, author of Priceless: The Myth of Fair Value, “most of us have no idea what value is.” As a result, we might be influenced in ways I never imagined. Poundstone talks about research that looked at customer purchase behaviours when it came to a beer option (yeah, another beer study!).  There were just two alternatives available in the initial test: a standard option and a premium option.

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