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Cut your price
by a penny -- and raise orders by 10%
© 2004 By
Marlene Jensen
If your product or service is priced at a
"barrier number," you're
throwing away sales - unless your product is a specific type
mentioned later in this article.
To tap the power of human psychology, your price should not
be
$15 or $10,000. Instead, $14.99 and $9,950 are likely to
gain you
5-15% more orders.
Most marketers know this. The problem is that lots of us
don't
use this knowledge.
"That's ridiculous!" I've had clients tell me. "Everyone
knows
that $299 is really $300. You're not fooling anyone. I'm not
going to insult people by using a stupid price like $299."
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However, as marketers we're supposed to give people what
they
want - not what we think they should want. You might believe
people should respond to $14.99 exactly the same as to $15,
but that doesn't mean they do. Customers have shown
repeatedly,
in test after test, that they prefer $14.99 to $15.00. And,
frankly, who are you or I to tell customers what they should
be
doing?
Example: BackCountryStore.com dropped all their whole-dollar
prices by a nickel and told MarketingSherpa.com, "It's had a
pretty dramatic effect. We're having more sales because of
it."
If your position is the "cheapest"
Wal-Mart has taken this tactic even further, with prices
that end
in strange numbers such as $12.87 or $9.44. Those numbers
carry
this subliminal message: "We're keeping prices so low we
didn't
even round them up by a few pennies!"
BEAT the Cold Winter of 2007 ARIZONA'S NEWEST WONDER
Kartchner Caverns State Park opened in 1999. This stunning limestone cave system is one of the top in the world. Visit Sunny Southwest this cold winter |
However, I spent a full hour, recently,
looking at prices in a
Wal-Mart. Guess what? While they had some
even-dollar prices,
I never saw a price ending in 1-9 cents.
Also, for every 10-15
items ending in 44-99 cents, there was just
one ending in 11-43
cents. Example: Out of 53 small items (drill
bits, etc.) sold in
one section, just seven had prices ending in
10-43 cents (none
ending in 1-9 cents).
Obviously, this is too big a difference to
be unintended. This
says Wal-Mart knows that if they're adding
cents to a price, they
might as well add more cents than less
cents. Because,
psychologically, more cents won't hurt the
sales -- only more
dollars.
Services costing thousands of dollars
People about to spend $10,000 or $20,000 for
a consultant or
other professional are human too. They would
prefer to spend in
the $9,000s instead of in the $10,000s. But
a $9,999 price has
too "bargain basement" a look to it.
Instead, price at $9,900 or
$9,950. That $50 to $100 you give up could
greatly increase your
likelihood of getting the job.
If you sell luxury items
If you have a luxury product or service, you
should probably not
use discount-looking pricing. Certainly not
without a test to see
if it hurts your product's or service's
positioning.
If you're the best hairstylist in L.A., your
prices should be in
whole dollars. If you're selling the most
expensive bubble bath
in the world - price in whole dollars.
BEAT the Cold Winter of 2007 ARIZONA'S NEWEST WONDER
Kartchner Caverns State Park opened in 1999. This stunning limestone cave system is one of the top in the world. Visit Sunny Southwest this cold winter |
For example, Harvard publishes a
number of health newsletters.
Given the Harvard name, these marketers have
decided to use whole
dollar prices - selling those newsletters at
$22 or $24 instead
of $21.95 or $23.95.
What should you do?
If you're using whole-dollar prices and are
not a luxury product,
you should immediately test prices just
below your whole dollar
number. Your bank account may thank you!
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