In order to succeed in nowadays competitive market it’s necessary to use smart pricing strategies when selling products or services.
Today we offer you an article on behavioral economics that will help you to see a clear picture of how to set prices right. Nick Kolenda has compiled a huge list of pricing strategies. It’s an absolute must-read. The article is divided into 4 parts, each containing different strategies and tactics you can apply straightaway.
Nick Kolenda offers 4-step work process with prices:
- determining prices.
- influencing perception.
- motivate to buy.
- maximize revenue.
To every step he adds several strategies and various tactics so you can choose whatever you like.
For example, one of the tactics states that it’s better to choose numbers with fewer syllables. The explanation is quite simple: people’s brain uses more resources to process long prices and as we use so much of our mental resources, we falsely think that the prices must be larger. What’s more, if you use prices with fewer syllables, our brain perceives them to be lower.
As for physical size of a price, it’s also possible to affect people’s perception this way. Due to a fluency of processing, people think that a price is smaller if it’s displayed in a small font. The effect of this tactic is enormous if it’s contrasted with a large-size reference price.
Nick Kolenda also covers topics of how to use discounts smart, reduce “the pain of paying”, make price increases undetectable and so on.
He points out that you should carry out A/B testing. Do it for color, size, location of the price, but not for the price itself!
The truth is the article is really huge but there’s a 15 min video summary for everybody who doesn’t have enough time to get acquainted with the full text version.