How you present your pricing can be more important than how low your price is. How you pitch your sale can be more important than how substantial your discount is.
This guide covers 3 essential techniques for framing your pricing and 3 killer tips for framing your sales. These tips will help you drive more sales while still holding onto a strong profit margin.
Tip 1: Tier Your Service
If you run a service business, a great way to encourage people to spend more is to differentiate your service into three tiers (like basic, standard, and professional) and create a comparison chart. In many cases, people will splurge for a higher pricing tier for fear of missing out.
Tip 2: Use Comparative Pricing
Comparative pricing is like tiered pricing, but more suitable for a retail environment.
If you run a store and you place an expensive item next to a cheaper one, your customer naturally jumps into comparison mode.
Your customer is either going to splurge for the expensive item so they don’t miss out on the extra benefits, or they’ll grab the cheaper option and feel like they snatched a deal. Either way, it’s a win for you.
Comparative pricing is so effective that even small stores with limited space will often carry at least an expensive and inexpensive variant of each type of product they sell.
Tip 3: Know When to Use Charm Pricing vs Prestige Pricing
Charm pricing is simply ending your prices with 9s instead of 0s. For example, you can charge $99 rather than $100 to lower the perceived cost of an item.
Time and again, charm pricing is proven to work better than other pricing in almost any circumstance. In his book Priceless, William Poundstone determined that on average, sales will increase by 24% when you use charm pricing instead of rounded prices.
On the other hand, if you’re selling a product that relies on people’s gut feeling (a handmade product at a farmers market or an expensive bottle of wine), then you may have better sales with prestige pricing (charging $20 instead of $19).
Tip 4: Change Up the Typography
If you run a product business, make sure to change the font, size and color of your new price to enhance the perceived difference from your old price.
Research has shown that this technique increases sales.
Not surprisingly, you can see this visual trick used at many major retailers. Target, for example, uses bigger, bolder, darker, wider typography on the sale price to contrast with the smaller, thinner, lighter, narrower typography on their standard price.
Tip 5: Use the Rule of 100
People frame numbers differently depending on the price range of a product. If you’re selling a $20 item at 25% off, it’s better to advertise “25% off.” But when you’re selling a $2,000 item at 25% off, it’s better to advertise $500 off.
Why does this work? In people’s minds, a big number means a big sale. “4” is a small number, so advertising “$4 off” doesn’t seem like a huge deal. “25” is a bigger number, so advertising “25% off” makes the sale seem more significant. On the other hand, “500” is a huge number. It’s a lot bigger than “25.” So in the case of the higher priced product, it’s better to advertise “500 off” than “25% off.”
Thanks to math, there’s a simple rule of thumb.
- If your product’s original price is exactly $100, then it won’t matter if you advertise the percentage off or the dollar amount off. The numbers displayed will be the same.
- If your product’s original price is less than $100, you’ll be better off advertising the percentage off because the percentage off will always be a greater number than the dollar amount off.
- If your product’s original price is more than $100, you’ll be better off advertising the dollar amount off because the dollar amount will always be a greater number than the percentage off.
Tip 6: Use “Buy One Get One”
Buy one get one (BOGO) is a sales technique that encourages customers to buy a product so they can get another product for free. The free item should have value for the customer but be affordable for your company to produce.
If your customers don’t respond to a BOGO sale, it’s likely because they’ve seen the tactic before and your free offer just isn’t inspiring them. If that’s the case, try variations until you find an offer that interests your customers.
Some popular variations include:
- Buy 1 Get 2 Free
- Buy 3 Get 1 Free
- Buy 1 Get $10 Off Your Next Purchase
- Buy 1 Get 30% Off Your Next Purchase
- Buy 1 Get a Free Gift Bag
- Buy 1 Give 1
Test and Experiment!
We hope these pricing and sales techniques supercharge your revenue. The best way to find out which ones will work for your business is to test one out today.
What business are you in? What techniques have worked for your customers? What technique are you going to test this year?