Pricing: Simple Changes Can Have Big Effects

Creating Value

There are four main reasons why people value a product; either it saves them time, gains them money, gives them pleasure or helps them avoid pain.

To help emphasise the value of your product or service make sure that when writing or talking about it, the benefits you list match up to one or more of the four reasons above.

People will rarely look at your product in isolation, they will compare it to your competitors and if they list the same benefits as you, the value of your product will be reduced. Wherever possible create contrasts between you and your competitors.

Buying any product brings the worry that it could be a waste of money, a major loss of value. Help reduce this feeling in customers by using guarantees or flexible payments terms.

Create good deals with price anchoring

Use “anchoring” to make the prices you want your customer to pay seem better value.

For example, say you have a mug that you want to sell. If you position this mug next to a more expensive mug, the more expensive mug will ‘anchor’ people’s perception of what is a high price.

This will make the first mug in comparison seem like a much better deal!

Increasing prices without losing customers

Opt for more frequent price increases instead of one large price increase. People won’t notice.

Weber’s law says that magic number for price increases is 10%. Increase your chances for acceptance by upping your prices in increments of 10% or less.

Menus and bundling that compliment your prices

Make sure that when you display your product or service, such as on your website or on a menu, the benefits and choices are very clear.

Remember your price anchoring. Display your more expensive product before the one you want them to buy to make the perceived savings obvious. (This is called Top Down Pricing)

Use 3 pricing menus where possible – 3 is a magic number when offering customers choice. Make sure the difference between the top and middle price is less than the difference between the bottom and middle price.

Effective language

Use positive language to describe the benefits of your product to customers. Keep in mind the four reasons why people value a product.

Words matter - include words like "small", "low” or “minor" in your copy to enhance response rates.

If you would like any further advice on how you could improve your pricing and help create value in your products or services contact Hallidays on 0161 476 8276 or email hello@hallidays.co.uk

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