Pricing psychology: 6 ways to influence perceived value
Value is emotional, largely unconscious and we as consumers can be influenced by surprising things. Today we look at several case studies on value perception that you may consider testing on your own site and promotional campaigns.
Try charm pricing -- with caution
You’re undoubtedly aware of charm pricing -- the oldest pricing tactic in the book -- where marking a $2 item $1.99 or $20 at $19.99 feels like a lower price.
Does this work online?
Gumroad tested charm pricing, knocking a penny off every product’s round price. The conversion rate lifts tabled below:
However, charm pricing’s value influence (and conversion impact) depends on what you’re selling. You may find better success with round numbers. Research shows rounded prices work more for “emotional purchases” such as clothing, versus rational purchases like groceries. And for some reason, shoppers love nines. One research study shows pricing an item at $39 instead of $40 sells better than even the same item at $34.
As with everything, context matters.
GrooveHQ A/B tested charm pricing for its SaaS software, a test which proved insignificant. However, pricing was included in the sub-text of a free trial offer (perhaps glossed over by most visitors). The deferred nature of payment, and the fact funds typically come out of a corporate budget versus a personal wallet for B2B software are factors why charm pricing failed to impact conversion.
You may notice many high-end restaurant menus price without decimals or currency marks.
Research shows diners spend more when currency symbols and decimals are removed.
Does this work online? Luxury jeweler Lucardi tested removing the Euro symbol (€) on displayed prices (but kept decimals). The result was an 11% lift in transactions. It’s possible the symbol made prices seem lower, as researchers have found removing commas and decimals does (reducing phoenetic length of the price).
Compare to the competition
This tactic only works when you’re a discounter and can compare your “regular” prices to a higher MSRP (manufacturer’s suggested retail price), or live, dynamic price comparison with your competition.
Paperstone A/B tested a price compare widget and achieved an 11% lift in adds-to-cart.
Show % savings
If you compare “your price” to MSRP, add the percentage discount clearly. Shoppers hate doing mental math!
Use value verbiage
Call to action copy like “Sign Up Today!” and “Buy Now” are generic, forgettable, and miss the opportunity to persuade shoppers by appealing to “what’s in it for them.” Spelling out the value a buyer or member gets from your product or service can increase conversion dramatically.
Dressipi.com tested button copy “Show me outfits I’ll love” against “Sign up now.” The more personal, value-oriented treatment boost click-through by 124%.
Billund Airport tested “Buy Tax Free” against “Shop Online” with a 50% bump in click-through for the value-added CTA.
Sometimes it’s as simple as spelling out value. iHerb uses a Best Value badge on its upsell option (which overpowers the fact the discount on two bottles is only 5%).
Product copy also benefits from value-oriented messaging, however it depends on product and customer context. ConversionXL tested “hedonic” vs “utilitarian” product description copy for household appliances and found mixed results.
Tell a story
Human brains love stories! Telling a story increased bid price by 64% for a set of fish-shaped spoons on Ebay.
Perceived value of an art piece jumped 11% when a short bio of the artist was added to a product page.
Source: Adweek Infographic
Sometimes size matters
ConversionXL tested how product image size and white space impacts perceived value.
Consumers perceived a dress shirt to be higher quality and more valuable when surrounded by more white space than when zoomed in.
In contrast, the average perceived value higher for a larger image of a hard drive versus a smaller one. Though physical size doesn’t impact the storage capabilities of a hard drive, a larger image may subtly suggest more value.
These findings illustrate the power of product context. “Bigger images” are not always better, and buying criteria differ across products, categories and even customers. Consider testing image size in email and social creative.
Keep in mind perceived value is different than conversion. A live A/B test with real, unobserved site visitors (versus a survey) may have indicated larger images support product discovery, as larger images are easier to view from a category and search lists, and from product pages (especially on mobile).
Remember, context is king! Should you adopt any of these tactics, be sure to test them before you roll them out by default. Consider how your industry, competitive environment and customer attributes play into value perception across product categories, brands, promotional strategies and calls to action.