£5.00 or 4.99? £5.00 or 5.00? £5.00 or £7.50 or both? Subtle differences maybe but they can make a big difference to your sales. In her recent post Francesca Nicasio nominates three questions to ask before you set your prices.
The first is whether you should use the old .99 trick. Of course it’s clumsy and no sensible person will be fooled by it but the fact is, according to research quoted by Francesca, twice as many people bought one particular product at 1.99 as 2.00. Although it goes against all common sense, our brains are programmed to notice the left bit of the price more than the right. Also, people associated .99 or .95 prices with bargains. But (and there’s always a but) if you’re competing on quality, your customers are more likely to associate round prices with quality products.
Then there’s the matter of the pound sign. Francesca describes an American restaurant that found customers spent more when they left the $ sign off the prices. Not enough of a sample to draw definite conclusions but maybe the sign reminds them that it’s real money they’re spending.
Finally, Francesca reminds us of the importance of choice. As I’ve mentioned before, customers love, no, need a choice. Some will always pay top dollar, some will go for the cheapest and so on, but most will plump for the middle. In fact, if your customers are always going for the highest prices, you’re probably not charging enough. Offering a range of prices gives your customer something to compare with and reassures them that the price they choose is reasonable. I think the trend to price a handful of the ‘best’ theatre seats at a very high price is a good one. It makes the previous top price seem like really good value. And, if you’ve over priced them, you can always sell your best seats off cheaper at the last minute.
This blog was written by Paul Lewis, owner of the marketing consultancy The Lewis Experience based at Hampshire Workspace, and former Head of Marketing and Operations at The Mayflower Theatre. You can connect with him on Google+ and LinkedIn.