The Psychology of Pricing for Online Stores
Making purchases, whether in-person or online, is a psychological process for consumers. A number of factors come into play when our customers buy products, which means we cannot leave anything to chance as independent e-commerce retailers.There are numerous tactics and best practices that help make your pricing more appealing to a customer on a psychological level, resulting in higher conversion rates. We’ll cover a few tactics you can employ immediately to your online store.
Often referred to as the ‘’9’’ rule, this strategy involves all pricing ending in “9” and “99.” You may remember almost all infomercials on television offer some variation of, “3 easy payments of $19.99.” This is no coincidence. Research has shown that our brains perceive nine-ending prices differently than prices ending in a rounded digit. These studies show that, “Nine-ending prices will be perceived to be smaller than a price one cent higher if the leftmost digit changes to a lower level (e.g., $3.00 to $2.99), but not if the leftmost digit remains unchanged (e.g., $3.60 to $3.59).”
In short, if you are considering a price increase on products, or are noticing a lack of conversions, try changing your pricing and utilize the “9” rule. Apple’s website (pictured above) is a great example of this psychological tactic at use.
Remove All Mention of Payment
Unfortunately, buying products/services can be a painful process for some consumers. Let’s face it, nobody really wants to spend money. The last thing you’ll want to do as an independent e-commerce retailer is remind the customer their making a purchase and losing money. One psychological way to take their mind off idea of spending money is to remove the currency symbol. Subconsciously, this can be very effective in making online purchases a positive experience. Be sure to only remove the currency symbol if customers will know that the listed number is the price of the products, and not the quantity, stock, etc.
Consider eliminating any mention of payment or purchasing in the product description and customer journey. Ideally, the customer would not see any language related to payment until they hit the final “Buy.”
With this strategy, the goal is to position similar products with different prices in order to convince the customer to purchase the higher priced product, believing the higher price equates to higher quality. Whether this is the case or not is irrelevant. There is a sweet spot in pricing where the price is set high enough to embody high-quality, but not so high that it becomes uncompetitive.
This is ultimately a game for the customer, as they go back-and-forth choosing between similar products with different prices. The desired product is normally the higher priced item. This case study is a great example of comparative pricing being put to use.
Consider implementing these tactics into your pricing strategy to increase conversion rates in your store. It will take some time and plenty of testing, but once you find the right strategy, you’ll notice the benefits.