Once you’ve managed to look at your pricing model and strategy, it’s time to take it a step further.
Competition in the SaaS market is huge, so a simple detail in your prices can make all the difference and give you an edge over others.
When setting prices, the customer’s perspective is very important, so you have to know this one and see what psychological factors can make him not start making the purchase. With psychological pricing, you can make them take that step more easily.
What are the psychological prices?
As we have already discussed in the posts of price models and pricing strategies, price is fundamental to your business. In this case, we are going to the price detail, but that can make a difference.
When we talk about psychological pricing, a part of people thinks negatively about it because they argue that they are methods to trick the customer into buying. This idea is far removed from reality.
Psychological pricing is a way to finish your price in a way that is more attractive to customers, removing barriers that make it difficult to buy or create frictions in the relationship. Psychological prices are not put at the beginning of your price choice but are a way to make your final price more attractive.
With this pricing method, you play to put initial prices higher than the final ones to get customers to have the perception of a high expense. Once you have managed to get the customer’s expense “anchored” in that figure, you can take your product to the actual price.
This will make your price not seem so high to consumers and easier for them to buy your product.
How best this practice is understood is by setting a real example. Mailchimp, an e-marketing service provider, has a clear reference to Price anchoring in its pricing strategy.
It can be seen as the first price you read, it is a very high price of $299 for its premium version. This makes the buyer generate some sense of rejection for the price until they continue reading and see that the recommended version only costs $14.99, that is, 95% less than the first option.
This will make customers see the price of $15 with very good eyes, being able to remove that price barrier with this simple action.
To carry out this strategy, focus your efforts on the visitor’s look at their most expensive pack, even if they can’t sell it. That’ll make the other packs much more attractive.
In the decoy price is played with the attributes of price and quality, leading the consumer to the choice that the company wants. It is about playing with the measures of these to try to make the consumer discover in one of the products a better value for money.
How do we get this?
We must generate asymmetry in the prices of our products, that is, there will be a clear winner when making a rational choice.
As an example, is worth the previous case, we see how in Mailchimp’s pricing strategy there a very large price asymmetry is. The Premium price and the essential would serve as a decoy for people to buy the standard price. In this case, there is a big increase in quality compared to the essential and a big price drop compared to the Premium.
This is one of the most used techniques in all kinds of products for fixing your price. Our brain processes information and generates sensations in a very fast way, so we must try not to make our price generate a sense of rejection from the beginning.
We could call this technique the technique of 9 because it is based on trying to get prices to end in that figure to generate the first impact of a price lower than it is.
For example, let’s say we want to sell our CRM for $200. The customer’s first number he reads will be 2, so he’ll associate the price at $200.
What if we put the product at the cost of $199?
The customer perceives the number 1 first, so their first impression is that the price is at $100. It may seem like a simple modification, but sales are shown to increase substantially with this small, simple change.
Another technique like this is the so-called “odd-even pricing” which is to put the finished prices in odd numbers to give the same feeling as with the “Charm pricing”. It is a less used technique, but that is seen in certain products.
With the example above, the price of the product could be 197$, 193$…
Product bundle pricing
As indicated in the name itself, this method is to sell product packages at a unit price. It can be a very useful strategy for certain businesses that have many products and above all, for which many of their products create synergies between them.
It is also a good strategy to get ahead of certain products that would not be sold in a unitary way but that put them in packs make sense. In this way, we can generate extra revenue for our business.
One of the largest companies, Microsoft, uses this pricing method on its Office 365 Suite platform.
In this way, Microsoft gets some of its niche products, sold in conjunction with the most popular ones.
It is one of the most used methods by companies, although very similar to the free trial method. In this case, the trial is “almost” free, with extremely low prices for a limited period.
For example, if a product is worth $50 per month, we may offer the customer one month at $1. This will make the customer have a very large rebate and do not have as many barriers to test the product, giving them the option to make a mistake almost free of charge.
One of the most important barriers compared to giving that month for free is that the customer may think that they are already being made to give their credit card and that is something that usually causes rejection. It’s a somewhat risky method for this.
The decisions the brain makes is something that is very taken into account when choosing your psychological price. One of the most common reasons is to cause the client to fall into a saturation of information that causes him to enter into a “paralysis of analysis”.
The brain is prepared to remember in the short term a limited number of options, that number varies between 5 and 9, which explains that if you have a higher number of that, your brain may not be able to assimilate information so quickly and fall into paralysis.
If we can get that to happen, our chances are drastically reduced.
Conclusion, you must use a small number of options, the more synthesized you can give the buyer the choice, the more likely you are to sell your product.
Effect of the central position
Right now we’re talking about what might certainly be about the most commonly used options. It is nothing more than the middle term and the position of it.
It does not imply any secrecy, it simply relies on offering the customer the option of a product that is on average everything, both price and quality. Easy choice.
Most people don’t seek to get complicated, nor do they need maximum performance. At the same time, it is also not to be pleased to take the most basic options, so this technique will be perfect if we are interested in selling the average product of our options.
In this example, SEMrush, a famous marketing tool has a price strategy with staggered prices in which it offers an average price for its product “Guru”. It’s probably one of the most purchased options.
The price variable is vital when it comes to running your business, attracting customers and making your product profitable. Analyze well the type of product you have, what kind of product you want to sell, if you want to have one or more options, packs… Etc.
Don’t make this decision quickly, as it can be a fatal mistake. Take time on the tests and you’ll notice the successes immediately.
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