5 pricing psychology techniques to boost your sales
One of our favourite subjects to explore at Untapped is the fascinating world of psychology in pricing. It’s also one of the most effective ways to give your sales a boost. Because try as we might, we can’t escape human nature. When it comes to pricing, whoever you are, whatever the scenario, the human brain responds to certain triggers in the same way the world over.
By understanding how the brain works and responds to these triggers we can make subtle changes to how we present our prices. It’s called ‘Nudge Theory’. These nudges, or small interventions, can have a big impact on how successfully you guide customers and their perception of your prices.
What can these pricing psychology tricks mean for businesses?
When carefully applied, these simple psychological nudges can help drive sales. Even better, they’re straightforward and easily actionable changes that any company can make right now. So, whether you own a new tech start-up or run an FTSE-100 company, whether you sell products or services, here are our top 5 pricing psychology techniques you can use to help win customers’ decisions in your favour. Better still, give them a try!
1. In the psychology of pricing, it’s important to keep things simple
One surefire way to get any brain to switch off is to overwhelm it with information, known as cognitive overload. Our natural instinct is always driven by self-preservation and in this instance, energy conservation. People act based on the least amount of mental and physical energy required. Therefore, when it comes to the psychology of pricing, the simpler your pricing is to absorb, the easier it is for people to opt in. So, make it easy to identify the total price and what choices need to be made as part of that decision.
Understanding your customer journey is also key to this pricing psychology trick. By considering their journey to purchase you can offer them the right information at the right time. That might mean simply making your discounted prices super clear at-shelf or making it easy for customers to navigate your website and differentiate the price, and what’s on offer, for any given package. The simpler it is, the easier a decision it is for customers to convert.
Finally, the pricing psychology technique of keeping things simple goes for visuals too. According to an article in the Journal of Consumer Psychology, showing big numbers without the comma and dropping unnecessary decimal places makes the reader think a figure is cheaper For example, using £1599 will be perceived as a lower price than £1,599.00. Why? It’s a shorter visual length and is perceived to be a lower price.
A similar trick can also be applied when companies are pitching for new business. If you want your offer to hit home quickly and effectively, concentrate on the total price, and save the breakdown details for the contract.
2. Choice is king in the psychology of pricing
This tried and tested method might surprise you at first, but once you know, you’ll start seeing it being used to great effect everywhere you go. So, what do we mean by choice? If you offer a person one choice, the brain only has one question to answer, ‘yes or no?’ However, when you offer multiple options, three being the magic number, they’ve got to delve a little deeper. You see, in pricing psychology, by offering people a choice between gold, silver and bronze, or good, better and best, the brain is naturally forced to assess all three options on the table. We can’t help ourselves. The multiple-choice offering immediately changes the conversation from ‘to buy or not to buy’ to ‘which one should I buy?’, putting you in with a much greater chance of closing the deal. This is known as the Goldilocks effect. Smart stuff, right?
3. Remember to sell the cake, not just the ingredients in pricing psychology
It’s really important to reiterate value when it comes to psychology in pricing. Displaying a price as cold hard figures alone will have the effect of reducing decision making to purely a number-based decision. ‘Do I like that price?’ Whereas when you display price alongside a value message, you’re forcing the reader to consider the price more deeply and make a value-based decision.
This is something so often overlooked when companies are building client presentations. Let’s say, you’ve spent 20+ pages painstakingly explaining to the client where you can add value to their business. Yet, when it comes to the final, all-important pricing page, as so many companies do, you opt to display price as a breakdown of ingredients or actions that will be carried out. Wouldn’t it be better to present the sum total alongside a reminder of the overall outcomes?
Adding the outcomes or benefits into the pricing moment is a reminder of the whole package. This pricing psychology tactic makes it much harder for anyone to just throw out your proposal based on finances alone without giving the offer fair and proper consideration.
4. Drop anchors with big numbers.
There’s strong evidence of success in the pricing psychology tactic of price anchoring. The theory is that exposing people to any high number alongside your price can result in a higher willingness to purchase. How? The brain automatically assesses any number in context. As the higher number raises the reference point, it makes your actual price seem cheaper in comparison.
Imagine, for example, placing your £2000 watch next to a £10000 watch. The £2000 watch suddenly seems like a good deal. Throw in a £50 watch as the reference point and the £2000 watch will be perceived as very premium. The psychology of pricing approach wins again.
The same anchoring effect can also be triggered by numbers that aren’t prices, for example, “Join 40,357 happy customers”. Placed alongside your prices, these other big numbers can anchor how your price points are perceived.
5. Why size really does matter when it comes to pricing psychology
Perception is everything in this simple but effective psychology of pricing tactic. People see size universally, so we easily confuse visual size with numerical size. The result? By reducing the font size of your prices, you can make the brain think the price is smaller. Incredible, but true. Just don’t forget to keep it clear and easy to see. Any extra effort required to find the price and you’ll lose the moment.
Our top psychology of pricing tricks in recap?
It really couldn’t be easier to apply these actionable pricing psychology tips to your business:
- Keep it simple
- Offer choice
- Include value or benefit
- Anchor alongside a bigger number
- Make the font smaller
Hooked? Discover plenty more pricing psychology ideas
We’re confident that by using the right mix of psychology of pricing techniques we’ve outlined here can offer simple ways to boost sales. Whatever business you’re in, they are well worth exploring to see which may offer you the best results. By better understanding the brain and its natural functions, it is possible to trigger the desired sales response time and time again. And these are just the start. The psychology of pricing is such a rich and interesting area, from text colour to evoking positive emotions, we’ve got plenty of other great insights and ideas to share.
Of course, pricing psychology techniques aren’t the only way to help boost sales through pricing. For a much deeper look into your prices and pricing strategy, why not try our quick-fire Pricing Scorecard? Find out more about how pricing strategy, communication and design can deeply impact your sales performance.
Pricing strategy help is always at hand
If you’d like more expert advice on how to approach pricing or are looking to redesign your pricing strategy, we’re happy to help. Explore our services or get in touch. We can’t wait to hear more about your business and help you unlock new growth.
