If you know your services are priced appropriately, don’t rush to drop your price or offer discounts!
Instead, you can use some of the following price-positioning and anchoring strategies to win a few more conversions from your most budget-conscious leads.
Introduce a More Expensive Option
This is simple, yet effective. If you want to make the price of the service you want to sell appear more reasonable, position a similar but more expensive product right next to it.
According to a classic study published in the Journal of Marketing Research, Williams-Sonoma had a $275 bread maker listed in their print catalog, and almost no one was buying it. When they introduced a similar bread maker for $429 and positioned it next to the $275 bread maker, sales of the $275 bread maker nearly doubled.
For best results, try leading with the most expensive option. This is price anchoring at its most basic. It leverages a decision-making principle called primacy effect, where the first thing a person sees, especially in a list or lineup, sets their expectations for what follows. If the first price they see is very expensive, then they may be pleased to see the less expensive price that follows.
Remember, the goal is not necessarily to sell the new expensive product – although you might – but rather to increase conversions of your original product.
Increase the Perception of Value
There’s a copywriting technique called the “value prism.” The idea is to shine a light (not literally) through your product to dazzle people with everything that went into creating it. Make them see the previously unseen value at its core, so that your product feels much more valuable and your price much more reasonable.
Simply list everything that went into creating your product or that makes your service so valuable.
For example: A box of software isn’t just a box with a disc and a booklet inside. It’s the product of a team of 11 Stanford PhDs, 21 engineers, 4 tech writers, and 7 designers from the Rhode Island School of Design. It’s the culmination of 370 years of education, all completed in the last 2 decades at impossible-to-get-into schools. It’s fourteen months of 20-hour workdays for a team of 40 experts. It’s 29 independent user studies, with improvements made after each study. It’s 3 utility patents and 5 design patents. It’s over $7 million of pure innovation.
But if you’re failing to tell your prospects about all of the value within the box, then, as far as your prospect can tell, it’s just a disc. To your prospect, $490 is a lot to pay for a disc. But $490 is a steal to get the product of the greatest engineering and design minds of our time.
Are the photo booths you offer “just a photo booth”?
Didn’t think so!
Another example is Dyson, the vacuum cleaner. They’ve claimed 27% market share in the U.S. with their story of the years of thinking and experimentation that went into designing their vacuums and all the patents that were obtained.
In fact, if you visit their About page, you see this tactic in action. They highlight the list of bullets below:
- 5 years of prototyping
- 5,127 prototypes
- Experiments held in “development laboratories”
- 1,000 Dyson engineers and scientists in Britain, Singapore, and Malaysia
- Engineers in disciplines like Fluid Dynamics, Aerodynamics, Turbo Machinery, and Acoustics
Once you know what’s really behind a Dyson, that $499.99 price tag seems more manageable.
An extension of this strategy is to list everything that a customer gets when they choose your product. According to some studies, this appears to be most effective for luxury products & services. So it may be something you want to experiment with if you are trying to position your brand as a more premium/luxury one.
Remove the Dollar Sign ($) and Make the Prices Physically Smaller
A study reported by Cornell found that diners were more likely to spend more when the dollar sign was removed from the prices listed on the menu.
Neiman Marcus doesn’t use dollar signs when trying to sell their pricey items (like Valentino handbags).
Another study, discussed here, found that a sale price is more palatable when it is written in a smaller typeface. A price that is physically large may create a perception of being “more.”
Make It Seem Like Everyone Else Is Fine With Your Prices
The best way to normalize something is to make it appear that the whole world is doing it. This is often referred to as social proof.
Social proof comes in so many forms like reviews & testimonials, disclosing the number of people who have taken photos in your booths, showing video clips of people waiting in line to use your booth, etc.
You wouldn’t believe how many photo booth websites only show images of the booths themselves. This is a huge missed opportunity. It would be more effective to show crowds of people using and having fun with the booth. That’s what the client cares more about.
Most clients are not booth professionals. Showing images of your 4 different booth setups doesn’t do much for them (except give them an opportunity to look for random things they don’t like the appearance of).
Create a Visual Perception of Luxury
If you walked into Walmart to buy a pillow and saw that the average price was $300, you’d walk right back out. It’s hard to sell expensive products in environments that feel cheap.
If people are predominately booking your booths via your website, you need to craft a sense of luxury on there. Enveloping your prospect in luxury throughout their entire booking experience will make paying a higher price feel more palatable.
You can do this with a beautiful site design that showcases your booths with attractive photos/videos and displaying the very best output your booths have ever captured.
Mastering the art of pricing involves more than just adjusting numbers on a page. By strategically implementing pricing-positioning and anchoring tactics, you can influence customer perceptions and enhance the overall value proposition of your offerings.
Remember, introducing a more expensive option not only serves as a pricing anchor but also sets the stage for the perceived value of your primary product. The “value prism” technique, shedding light on the intricate details and expertise behind your product or service, can transform a seemingly ordinary offering into a symbol of innovation and excellence.
Small changes, such as removing dollar signs and minimizing font size, may seem subtle but can significantly impact how customers perceive prices. Social proof plays a crucial role in normalizing your pricing, showcasing that others find value in your services through testimonials and visual representations of satisfied customers.
Furthermore, creating a visual perception of luxury, especially in online spaces, can contribute to a more immersive and premium customer experience. Craft a website that not only showcases your products but envelops your prospects in an atmosphere of opulence, making the decision to pay a higher price feel not just justified but rewarding.
In essence, pricing strategies are a delicate dance of psychology and presentation. By employing these techniques, you’re not just selling a product or service; you’re crafting an experience that resonates with your audience, making them not only customers but enthusiasts willing to invest in the value you uniquely provide.