Results: Should You Put the Cheapest Option First or Last?

Cheapest option (50Mb) shown first

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Cheapest option (50Mb) shown last

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Should You Put the Cheapest Option First or Last?

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Difference Between Versions:

Version ACheapest option (50Mb) shown first
Version BCheapest option (50Mb) shown last


Key Performance Indicator (KPI): 

Test Goal:

Increase sales of the most expensive 500 Mbps Internet option

Traffic Source: 

All

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Test Run By

Greenhouse Group

Test Run For

T-Mobile Thuis

Test Run On

Optimizely

WINNING VERSION

B

Poll Results - The Best Guesses:

Should You Put the Cheapest Option First or Last?

  • Version B
  • Version A
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Test Details:

Greenhouse Group, a Dutch digital optimization agency, conducted this powerful pricing study for their client, T-Mobile Thuis, a popular phone and Internet provider. 


Background:

Like many regions of the world, in the Netherlands, some areas have access to faster Internet speed, beyond a standard DSL connection.

This test was specifically targeted at those Dutch customers who had the option to obtain T-Mobile’s fastest 500 Mbps Internet option.

Pre-research showed only a small group of users were taking advantage of the fastest Internet speed — which provided many benefits, including being able to use multiple devices at the same time, better gaming, faster file downloads, and 4K TV.

As the fastest option, it was also the most expensive, bringing T-Mobile more profit.

To sell more of the faster, pricier 500Mbps Internet packages, the testing team brainstormed several optimization ideas. One idea was to change the order in which the items were presented.

Originally, the lowest speed (50Mbps)/cheapest price was shown on top. Each option followed in ascending order, with the fastest (500 Mbps) and most expensive option at the bottom.

Although it seemed counter-intuitive to hit users with the most expensive option first, the testing team drew on the psychological principle of the Anchoring Effect.

Anchoring Theory postulates that humans have a cognitive bias in which we have the tendency to rely heavily on the first piece of information offered — the “anchor” — to compare and make subsequent decisions.


Hypothesis:

Based on the fact users were likely using the first piece of information presented to compare pricing, and make subsequent judgments, the team suspected changing the order of the options — presenting the fastest, most expensive option first — would “anchor” users to see the fastest speed as the most appealing one.


Test Set-up:

To definitively determine if presenting the most expensive option first would make it seem most appealing, an A/B test was set-up, on Optimizely. The test ran for 37 days.

Traffic was split 50/50; over 11,300 users saw either the version with the slowest, cheapest Internet option at the top. It looked like this:

Or, the variant with the fastest, most expensive Internet option at the top, and the cheapest option at the bottom. It looked like this:

Internet package checkouts were tracked across both versions, with overall orders gauged as the Key Performance Indicator (KPI). 


The Real-Life Results:

 Winner: Version B with the most expensive option “anchored” at the top worked wonders.

Simply changing the order in which the Internet options were presented – by putting the most expensive option first – markedly lifted checkouts of the 500 Mbps package.

When shown at the bottom, checkouts of the fastest 500 Mbps package were 5.35%. By simply moving this option to the topic, checkouts increased to 7.19% — a 34.4% conversion lift. Results achieved 99% confidence.

Consequently, checkouts of the cheaper, slower 50 and 100 Mbps packages dropped from 25.3% to 22.75%, a significant conversion of decrease of 10.6%.

Despite the drop in cheaper package purchases, the increase of the more expensive Internet packages contributed to an overall 14.9% increase in orders, at 92% confidence.

These results show, overall, it was highly beneficial to present the most expensive Internet package first since it resulted in significantly more sales of it.


Analysis:

The order in which pricing options are presented can influence perceived value.

Presenting the lowest priced item first can make the other available options seem comparatively more expensive, and, therefore, less desirable.

For T-Mobile, putting the slowest, free option first made everything else seem out of reach. Fewer people wanted to shell out money, even if they got faster Internet.

Take a look at this pricing chart and see if you’d feel the same way:

Now look at this pricing chart:

All of a sudden, €17.50 seems like a great deal. And, the other choices didn’t look as appealing because the Internet speed is much slower.

Putting the fastest speed/highest priced choice first “anchors” all the other options.

According to research by Tversky & Kahneman, this shift in perception happens because we have a cognitive bias where we base the value of one thing by comparing it to something similar — then making judgments on it.

Here’s another real-life example.

Take a look at this pricing table from the networking website Communo:

Now that you’re aware of it, what’s the first thing you notice?

The most expensive “Agency+” option is shown first.

As a result, it anchors our perception of value. The $850 value becomes a reference point to judge the other options. In comparison, everything else looks a bargain.

The second, “Agency” option — for only $299 — now seems like a comparatively great deal; it’s probably the one you’d spring for.

This shift in perception is the Anchoring Effect applied.

Here, the $850 option set the bar. It made the $299 price point look comparatively cheaper.

Had the $850 option not been presented, there wouldn’t have been a natural comparison to make. Including it anchored the perception of value. It also acted as a decoy effect – a phenomenon explained more in this helpful Pro Member article.


Ultimate Take Away:

Now that you’re aware of the Anchoring Effect, you can use it to your advantage to optimize your pricing and sales.

When formatting a pricing table, it may be beneficial to present the highest-priced item first.

But, always test.

It’s important to note, the study by T-Mobile looks at the anchoring effect in a vertical, column format. The example presented with the Commun-o site is in a horizontal row format.

Before implementing any changes on your website, it may be valuable to confirm the anchoring effect works equally as well when the pricing is presented horizontally and vertically. 


Immediate Application & Tangible Takeaways

  1. Apply the Anchoring Effect

People rely on the first piece of information presented to them and make decisions based on comparative judgments of that information.

By presenting the most expensive item first, and showing how it compares to similar, cheaper items, you can sway purchase decisions.

That’s because people tend to judge the value of a product based on the discount they appear to get and how this value compares to the other options presented.

  1. Apply Other Psychological Effects

 This test shows cognitive theories can be aptly applied in real-life situations to create strong conversion uplifts.

It can be valuable to delve deep into cognitive psychology literature to see if there are theoretical frameworks you can apply to your own testing.

If you don’t have time for this kind of intensive research, don’t fret. We’ve done the work for you.

Here’s an actionable article describing several psychological principles and how you can immediately apply them to improve conversions on your website (available to Pro Members only).

Note – this article is only available to Pro Members.

What's the perfect formula to create your pricing tables?
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Poll Results - The Best Guesses:

Should You Put the Cheapest Option First or Last?

  • Version B
  • Version A
Loading ... Loading ...

Sign-up now to get free, gamified A/B tests and more helpful content delivered to you each week.

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Test Run By

Greenhouse Group

Test Run For

T-Mobile Thuis

Test Run On

Optimizely