Pricing Psychology Principles – The Numerosity Adaptation Effect

By: Deborah O’Malley | August 16, 2018

What Works With Pricing?

When it comes to pricing products, what converts? 

If there’s one thing you can count on, it’s that the way you present your pricing impacts conversions

The presentation of numbers heavily influences our perception. And, that, in turn can affect whether we decide to purchase something. Case in point, here’s a simple test.

Take a look at this diagram:

Which bottom circle contains more dots? The bottom left or right circle?

If you glanced and quickly guessed the bottom left circle, you’re like most people who have done this experiment — and thought the left circle had more dots.

In actuality, both bottom circles have the same number of dots.

But, most people perceive the bottom left circle to have more dots. Why?

It can all be explained through a psychological principle known as the Numerosity Adaptation Effect.

Numerosity Adaptation Effect

The Numerosity Adaptation Effect is a psychological phenomenon in which people tend to misjudge the quantity or probability of numbers because they don’t fully consider variables, or unit sizes, impacting the number.

In the dot example above, because the top circles differed – with the right top circle having the most dots – most individuals automatically perceive the bottom circles to also be different.

We don’t fully consider the variables or unit sizes impacting the number and, therefore, tend to misjudge the quantity of numbers.

Normally, this misjudgement would seem like a bad thing.

But, in Conversion Rate Optimization (CRO), it can be used to your advantage to make a price or number seem more appealing.

Real-life A/B Test Example

Consider this real-life example by Centers for Medicare and Medicaid Services, the federal health agency that administers Medicare and Medicaid in the US.

They wanted to know whether the way a number was stated impacted conversions, for insurance applications.

To test, they created two different campaigns. The first used a percentage and said, “66% of individual have plan options available to them.”

The other used the exact same amount, but was written out in simple numbers. It said, “2 out of 3 individuals” have plan options available to them.”

Testing which offer was more persuasive, the team found simply changing the number from 66%, to 2 out of 3, led to an incredible 106% increase in insurance enrolment conversions!

Although both numbers equalled the exact same amount, the presentation of the smaller figure (2 out of 3) was more immediately understandable and relatable.

Application To Your Pricing Strategies

How can you use this knowledge to craft your own pricing strategies?

One takeaway is to realize that people tend to gravitate towards smaller numbers because they’re easier to visualize and understand.

Applying the Numerosity Adaptation Effect, you can test the effect of using smaller, simplified numbers to drive conversions.

For example, if you’re a CRO specialist working in the natural health industry, you might apply this knowledge to help guide a client to better price their protein powder.

Let’s say your client sells two sizes of protein powder and you’re working to optimize the site to increase overall sales.

A strategic move would be to test pricing the smaller bottle similar to the larger bottle.

Wait. What? Price the smaller bottle similar to the larger?

That’s right!

Some pricing research shows people are more likely to choose a product option if the choices are similar, but there is a small price difference.

So, it’s to your advantage to offer choice in products, but make the pricing difference between the products nominal.

You might, for example, try pricing the smaller bottle at $44.99. While the similar, larger bottle could go for $49.99.

At first glance, both bottles look similar, but the smaller jar seems cheaper.

Breaking down the price on a per pound basis, the larger can is actually the better deal.

Yet, many people will gravitate towards the lower-priced bottle because they haven’t fully considered how the unit size impacted price.

And, this is the Numerosity Adaptation Effect in action!

The great news is, you can use it to your advantage generate more sales of the smaller, more expensive bottle.

Immediate Application To Your Marketing Work

Applying the Numerosity Adaptation Effect, you can test:

  • The effect of using smaller, simplified numbers to drive conversions (2 out of 3 people vs. 66% of people).
  • If percentages or ratios perform better (eg. 66% vs. 2 out of 3)
  • If it’s advantageous to pricing the smaller version similar to its larger counter-part.

Tweetable Takeaway:

Look for ways to strategically price your products so the amount appears in the smallest form possible — even if it’s only a perceptual difference.

What Are Your Thoughts?

What have your found works well in pricing your products? Tell us your thoughts in the comments section below.

At GuessTheTest.com, our aim is to help inform your digital marketing efforts with valuable and inspiring A/B tests and CRO tips, tricks, articles, and resources that help turn your ideas into profitable ones. We hope you’ve found this article useful and can immediately apply it to improve your own marketing performance.

 

By: Deborah O’Malley | August 16, 2018

What Works With Pricing?

When it comes to pricing products, what converts? 

If there’s one thing you can count on, it’s that the way you present your pricing impacts conversions. 

The presentation of numbers heavily influences our perception. And, that, in turn can affect whether we decide to purchase something. Case in point, here’s a simple test.

Take a look at this diagram:

Which bottom circle contains more dots? The bottom left or right circle?

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By: Deborah O'MalleyBobby Hewitt Recent comment authors
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There’s a really great strategy for testing in this article. And your test results will tell you a bit about how your customers think. As a conversion rate optimization specialist in the dietary supplement space I can fully attest to the numerosity adaptation effect. Many health supplement customers evaluate a purchase and price based on how long a bottle of supplements will last them. So just like the strategy here, one thing you can test is the price per day to take your supplement (bottle price divided by the number of servings). This positions your packages differently. So naturally when… Read more »