Prices go up, sales go down, everybody knows that, right?
Not so fast.
While true for most of the product categories, it is not always the case.
Cigarette sales aren’t very affected by price changes because they’re addictive.
Similarly, iPhone lovers won’t be very sensitive to change in price because of brand loyalty and the perceived value of the product.
Ok.. How does this help me sell my digital products again?
Read on to find out.
Anchoring and contrast
Remember the last time you went to a restaurant?
You walk in, go to your table. Sit down.
Next thing you know the waiter brings you the wine menu.
You look at the first item and see a $3,000 price tag. Ouch!
You start scanning the page to find something more affordable.
Couple of rows down you find a $60 bottle that seems ok.
Consider another alternative, when the prices are aligned from cheaper to more expensive options.
When are you more likely to buy the $60 bottle? Not sure?
I’ll tell you when – when the ‘anchor’ is set higher.
Compared to $3,000 bottle, the one for $60 doesn’t seem so expensive.
Similarly, the best way to sell the $49 ebook is to put it next to one priced $390.
Even if you don’t end up selling any of the premium priced goods, it will still help to drive sales of the cheaper version, which really is your goal.
A good way to do it is by using tiered-pricing system for your goods.
Ah, the power of 9.
Why is it able to trick us into buying stuff every single time?
Most of us read left to right.
More importantly we have this little voice in our heads that says the price out loud in our heads as we see it.
So if the new iPhone case costs $17.99, we will read it as “17” and then “99”.
The important stuff comes first, right? So we only remember 17.
We can rationalise later all we want.
Our subconscious will remember the price as 17$.
Does it really boost sales?
Surely with trick this old, we could’ve adapted and learned to largely ignore it.
Studies conducted in the past 30 years don’t support this point of view.
It seems that charm prices (everything ending with nine) really do boost sales by an average of 24 percent relevant to nearby rounded prices.
This doesn’t mean that you have to go ahead and change your price to something ending with 9.
This may not make sense in your case, if you’re going for ‘expect to pay’ message with your prices.
But is there anything more powerful than 9?
Researchers have found out that the sale price with the old price indicated beside it has outperformed the prices ended with 9.
However, once they tested the same thing with the new price ending with 9 too, they found an absolute winner.
The lesson here? You may want to discount your price down to something ending with 9.
Pricing For Value
Psychological pricing will have minimal effect on your sales if you don’t have any customers.
You need to have some eyeballs on your goods before you can fully benefit from these techniques.
A good place to start is this blog post on how to sell digital goods without a large following.
The next step would be to adopt value based pricing model.
Your audience will never tell you the perfect price for your product. For one very simple reason.
They don’t know it.
If you ask them about the pricing outright, the results will not please you.
The majority of the people will state a much lower price compared to what they could have paid in reality.
More importantly, it’s much easier to part with hypothetical dollars.
So even if you create a survey with only two relatively high price options, you will not get any insights into how much are your customers really prepared to pay.
Are you taking advantage of your customer?
The decision whether to test these strategies ultimately has to be taken by you.
Dell and Amazon were practically crucified by the general public when the details of their A/B testing of the product prices were discovered.
Essentially they were displaying two different prices for the same goods to different customers.
The lesson here is to always remain honest and transparent with your customers.
Don’t try to trick them.
This will royally backfire, as these people will not only turn their back on you, but they will spread the bad word among their peers.
Over To You
Have you experimented with pricing your digital goods? What has worked the best for you? Let me know in the comments section below.