Pricing Psychology Principles – When Should You Show Price?
When Should You Show Your Product Prices?
By: Deborah O’Malley | 2018
Before you buy something, there’s inevitably one thing you want to know: how much does it cost?The price tag can make or break the deal.
As digital marketers, we can apply pricing psychology principles to make items appear more desirable and less expensive.
As this article explains, pricing two items similar to each other can impact sales. And, this real-life A/B case study shows manipulating numbers by offering a monthly instalment option can insanely boost sales.
But, beyond appearances, there’s one aspect that’s crucial to consider in product pricing: timing.
Timing refers to when you should make the price of your product known on your site.
Should price be the first thing shoppers see when they land on your site? Or, should you get shoppers into your sales funnel, then hit them with the price?
Nobody likes to be taken by surprise, especially when it involves a high price tag, or outrageous shipping costs. But, in some situations, saving the price till your shoppers are deeper in your funnel can be helpful to increase conversions.
What situations are those? Well, they’re based on two factors.
The Two Influencing Factors
These two factors are:
- The value of your product
- The qualities of your product you want to emphasize
Research looking at the brain patterns of online shoppers has found that when a product is displayed first — with the price later — shoppers make the decision to buy based on the products’ qualities, rather than on price.
In other words, shoppers think about the benefits of the product as the most important swaying factor.
Product First = Evaluation of Product Qualities
You can imagine that decision-making process looking like this:
Price First = Evaluation of Worth
In contrast, when the price of a product is immediately displayed, shoppers make their purchase decision by assessing if they think the product is worth the price tag.
That assessment process can be visualized like this:
Application To Your Pricing Strategies
Based on this research, your proper pricing strategy depends on if you’re trying to sell:
A) The specific attributes or your product
B) The value of your product, based on its competitive pricing
If your product has specific attributes, that are important selling points, it’s best to present these benefits points first. Then, once you’ve got the customer sold on the features, you can hit them with a dose of reality, telling them the price they have to pay to obtain these great goods.
By this time, you’ve gotten shoppers so excited about the product features, they’re more likely to decide they simply can’t go without the item.
So, if you want to sell a computer, for example, it’s best to first present the specs — emphasizing the speed, memory, etc. — as a selling feature. Then, state the price.
True story: I have a friend who justified buying a $3,500.00 <– (notice how the extra zeros make it look way more expensive! Take this test for more insight on that pricing trick) road bike because it was sleek, fast, and came with free lifetime tune-ups. Despite being a fair weather cyclist, my friend was sold on all the features that came with the bike. The price became secondary. And, the fact she wouldn’t ride it that often all of a sudden didn’t matter anymore. She had convinced herself she needed the bike — no matter the high price tag.
This real-life example shows that presenting your high-price tag luxury item should, literally, be secondary to the amazing features and benefits your product offers.
Take the new BWM i8 Coupe, for example. <drool>
This car is loaded with all the bells and whistles, and sells for a pretty penny.
To motivate shoppers, BMW has appropriately implemented a pricing strategy in which they show their products first, list the specs, then go in for the kill with hungry shoppers who will find a way to justify the cost — thanks to all the irresistible features.
In fact, if you go on BMW’s site, you’ll see, it takes many clicks into the funnel before a link to pricing even comes up as an option.
This pricing principle works well for most luxury items: lure visitors into the funnel – on a hope and prayer they can afford your product. Then, draw out interest, keeping motivated shoppers going (and saving), predictably irrationally convincing themselves of the need to buy your goods.
Otherwise, if you disclose the price right away, you’re telling shopper’s right off the bat: there’s no chance, sucker.
Does It Go Both Ways?
What about low-priced items that don’t have exciting selling features?
Should you try to find all the benefits, then state the price? Or take the opposite approach?
Research shows for non-discretionary, utilitarian items, like dish soap, for example, it’s best to persuade the purchaser based on price, rather than selling features.
In this case of dish soap, the features aren’t going to be the selling point for most shoppers – unless you’re offering an animal-friendly, environmentally sustainable option.
Rather, the price tag is likely going to be the deciding factor. Customers will go with the cheapest option. So, the price should be presented first. It’s the selling point.
To assess how you should position your pricing structure, ask yourself these questions:
- Am I trying to sell a product or service based on value? Or, on specs/benefits/qualities?
- Is it a necessary item? Or, discretionary?
- Is the price seen as affordable for my audience? Or, something to desire to obtain?
You can then use this table to decide if you should present the price or the product first:
Always Best To Test
All this said, it’s always best to test.
Here’s what the product page originally looked like. Notice there’s no price listed:
It wasn’t until shoppers clicked deeper into the funnel, on the specific product category page, the price was displayed.
As mentioned, A/B test results showed there was no significant difference between presenting the price immediately versus later in the funnel, on the product category page.
What About Mid-Range Products?
This finding could have been due to many aspects, but I believe two things were at play:
- The product has a mid-range price point, at $169 USD. While this amount isn’t chump change, it isn’t an exorbitant luxury price tag either.
- Some shoppers may see the product as a discretionary nice to have, while others, focussed highly on beauty, may see it as essential extension of their identity.
This example shows, that if your product sits in that awkward mid-range zone between cheap and luxury, and “essentially-discretionary,” presenting the price tag first — or later — might not make that much of a difference. However, you won’t know until you test.
Fear of Sticker Shock
That’s said, no matter the price range, hiding price from your shoppers can create distrust. So, don’t hold out on price too long, for fear of sticker shock.
We’ve all experienced it. There’s nothing more annoying than getting all the way to the cart page, just to find out the price; then, getting dinged with extra shipping charges, once you hit the checkout. This kind of sneaky pricing structure can be a deal breaker for shoppers.
In fact, research shows it’s 56% of the reason why shoppers abandon their carts. As this article by SEMRush explains, a much better strategy is to “make your shipping costs transparent while the customer is browsing through your products.” So, once you’ve told customers the price, be upfront about any extra charges they might incur. Don’t wait till later.
Summary: Immediate Application To Your Work
In many instances, presenting product price at the right time can make or break the sale. So, it’s important to determine when to spill the beans.
If the product features are the selling point, present them first. Get the customer excited about owning your product, then swoop in with the price.
Conversely, if your product undercuts the competition with its aggressive price, present the cost first. It’s your best feature.
When a product is displayed first, with price later, the decision to buy is based on product qualities. With price is first, shoppers make their decision on cost.
What Are Your Thoughts?
What pricing strategies have you found work well for you? Share your thoughts in the comments section below.
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