THE PSYCHOLOGY BEHIND PRICING

HOW DO YOUR CUSTOMERS DETERMINE IF A PRICE IS HIGH OR LOW?

Stanislas Dehaene, one of the leading researchers in numerical cognition, says there are three distinct and connected ways our brains perceive price – Arabic, auditory and analogue – and understanding how they work together can help you price products to appear more competitive.

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OUR TOP TIPS FOR COMPETITIVE PRICING

Record your results and experiment with these tips to discover the factors influencing your sales.

CRAFT THE PRICE TO SEEM SMALL

Reduce font size and syllables

Using smaller font taps into the analogue way shoppers perceive price, while fewer syllables in the read word reduce auditory length.

Use descriptive words before your price

Place words like ‘tiny’, ‘small’ and ‘low’ next to your price; never say ‘high value’ as the word ‘high’ detracts from your ‘low’ message.

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Divide prices into daily amounts

Make more expensive products like supplements and remedies appear cheaper by diving the price out to say ‘only $x a day’.

MAXIMISE COMPARITIVE PRICES

Use exact numbers for higher prices

We’re more likely to see higher prices as reasonable if they are exact. For example, use $58.12 instead of $60.

Position large quantity purchases right

For example, “30 tablets for just $10.99” allows shoppers to anchor on the high quantity (30), which makes $10.99 appear an attractive deal.

REDUCE PAYING PAIN

Emphasise the quality

Shoppers see prices based on material cost as fairer than those based on supply and demand. Emphasise product quality so customers think your profit is low and the deal is good.

HELP CUSTOMERS UNDERSTAND PRICES QUICKLY

Be clear and concise

Busy shoppers will spend more money and time in your store if they can easily understand prices and deals.

Get your rounding right

Rounded numbers are easier to process, however for rational purchases they can make prices seem artificially higher. So use exact numbers ($19.86) for rational purchases, and round for emotional purchases ($19).

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DISCOUNT THE RIGHT WAY

Use percentages

Display prices under $100 as a percentage discount so the number will seem higher than the equal numerical value.

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Save sales until the end of the month

Discounts are more attractive at the end of the month as budgets wear thin.

Test it out!

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Retail Focus: Capturing and Communicating to the Right Customers

IT’S KNOWN THAT CUSTOMERS ARE THE MOST IMPORTANT ASPECT OF A BUSINESS, BUT WHICH CUSTOMERS ARE THE MOST IMPORTANT? WHO’S RESPONSIBLE FOR YOUR STABLE REVENUE?

These questions can stump owners, with figures often showing not enough of the overall marketing budget is directed to repeat customers.

The Chartered Institute of Marketing explains that retailers are spending on average four to ten times more to acquire a new customer in contrast to keeping a repeat customer. This doesn’t sound overly beneficial when in fact repeat customers spend 20% more than first-time customer. SumAll (Social Marketing and Data Science analysis experts) also identified that on average 25-40% of total revenue comes from returning customers.*

Break out box
The more often a customer visits, the chance of them returning increases. So how can you encourage them to return? Two ways to market to existing customers are: compiling an email data base and using it with social media, and email marketing.

 

GROWING YOUR EMAIL DATABASE
Email marketing, through sites like Mailchimp, allows you to directly get your message to specific contact groups and track your success. Building a strong contact database is the foundation. It’s also important to add contacts continuously, as on average an email marketing database will degrade by 22.5% annually.** Below are 3 tips on growing your email data-base.

Try traditional techniques
Ask for an email address in store and at external events. To encourage consumers to give their email address, offer a loyalty card, special or free gift in exchange.

Work with your website and social media
Use your website and Facebook page to promote online contests or subscription links that require an email address submission.

Leverage off current subscribers
Create remarkable email content that encourages your current subscribers to share with their contacts. Encourage this by adding ‘social sharing’ and ‘email a friend’ buttons.

 

BUILDING YOUR FACEBOOK PAGE
When businesses post on their Facebook page, as little as 5% of the total ‘Page Likers’ will actually see the post. *** To increase this percentage, businesses can either build their ‘Page Likes’ or pay to advertise on Facebook. When paying for advertising on Facebook you have the option to create a custom audience list. This allows you to specifically select who you are advertising to, rather than spending money targeting everyone. Your custom audience list can be created by using the Facebook name, phone number or even by uploading the email address of your contacts straight from your Mailchimp account. Below are 3 tips on building your Facebook page.

Set up strong
Select a vanity URL so customers can locate your page easily. Set a cover and profile photo that portrays your brand personality and add visual mile stones to build consumer trust.

Turn incentives into likes
Incentives help persuade consumers to be interested. This can be done by offering valuable information like promotions, coupons, discounts or prizes for those that like your page.

Create engaging content
Posting visual and timely updates 2-3 times a week increases engagement and virality, potentially attracting new fans. Responding to positive and negative comments is important.

* SumAll, The Importance of Repeat Customers, 2013.
** Andy Pitre, Where Marketers Go To Grow, 2015.
*** Jon Loomer, For Advanced Facebook Marketers, 2015.