8 tips for your pricing strategy
A quick word about pricing psychology. Your pricing strategy and price labels are part of how you position your brand. It affects how people perceive your product’s value and can persuade people to buy more.
Large retailers put huge resources into research and setting their pricing strategy. If you’re a small business, here’s how you can play that game too.
Your customers will judge your price according to their understanding of how your product relates to others. So to be competitive, it’s not necessarily about being cheap, but about presenting your price in a way that ‘feels’ lower.
We hope this will help you give your customers the kind of deal that excites them.
1. Everybody likes free stuff
- Buy one get one free.
- Spend £X and get a free product.
- Free shipping.
2. Are signs off-putting?
Some research suggests that if you just put the numbers without the £ signs, it will help sales.
3. Discounts for quantities
Giving discounts to people who buy more is only fair. It’s an approach we follow here at Avery with discounts of as much as 72% on large orders.
4. Does the figure 9 work?
Of course, we all know that £9.99 is really £10. But apparently, the psychology works. Prices ending in 9, 99 or 95 are associated with better deals. In addition, we read from left to right so the preceding digits tend to stick in our minds.
On the other hand, some large retailers have moved away from using 9s and have started rounding prices to the nearest whole pound. There’s another school of thought to suggest that using whole numbers is more upmarket.
It has been suggested that round numbers work better if customers’ purchasing decisions are based on emotional factors.
5. Customer limits
If you limit the number of items that a customer can purchase, it may lead people to think that it’s scarce and that they need to stock up.
6. Keep the sums simple
If you are showing what the price was and what it’s been marked down to, you could create a sign saying "Was £20, now £12". This, according to experts, works better than "Was £19.99, Now £11.49". Even though the latter is a better deal, and includes the letter 9, it’s harder to compute and this could be a disadvantage when it comes to sales.
7. How big should the price be?
It’s instinctive to want to put price labels – especially sale price labels – in big numbers, using a large font size. But it turns out that the opposite could have a better result. Some research suggests that big font sizes relate to big prices in people’s minds.
8. Keep prices on the left
It has been suggested that when prices are displayed on the left, people tend to think of the price as being smaller because our brains are accustomed to seeing numbers increase from left to right, with bigger numbers on the right. Using smaller font size and smaller space between the digits (kerning) can help your prices appear smaller.
is different and every customer is individual, so not all of these hints are
going to work for everyone.