February 10, 2021

Pricing 101: Increasing Your Sales by Testing Price

The psychology behind price tells us that the way we present price can have a huge impact on the success of a sale.

Deborah O’Malley, founder of GuesstheTest.com, explains the most important principles of price in the conversation below. Watch to learn how you can potentially increase your sales from a few small changes.

A/B testing pricing is a valuable way to optimize profits.
But it’s hard to know exactly what to test or where to start.

In the video we cover:

  • What the 3 main principles of price are and how to apply them
  • Case studies of companies who have had huge success implementing these principles
  • How you can run the same tests for yourself and optimize your sales!

Watch the full conversation below!

View the slides below ↓

Testing_Pricing_Webinar_2-10

Transcription:

Hi everybody, welcome to our pricing one-on-one webinar. I’m Kathleen gave us here on the marketing team for perfect audience and today we’re going to be talking about just how much your products pricing can be affecting your sales. Let some tips on how you can begin running a B test for price.

0:21

Joining us today, to share with you everything that you need to know about pricing is Deborah O’Malley, Founder of Guest, The test dot com. So Debra is, has over a decade of experience in AB testing and conversion rate optimization space, where she gets to work directly with digital marketers of all kinds.

0:39

So, welcome, Deborah, it’s great to join us, or also joining us as our original research expert is, Todd … is the CEO and Partner of Ascend To, and if you aren’t familiar, as into, is, a research based marketing company that works with marketing tech and data companies, and conducting original research.

1:00

So Tatas worked with some large things like Oracle, Dun and Bradstreet and Adobe, just to name a couple of those.

1:07

So thanks, Todd, for joining today. You are quite welcome.

1:12

And then our third panelist for today is Eric Stockton. He’s the general manager here at Perfect Audience, and he’s known for being able to really grow businesses. So while overseeing a variety of sales organizations over the years, he’s personally manage some ad budgets of over $3 million.

1:27

So we have quite an all-star panel for you guys here, so thanks for joining everybody.

1:34

It’s great to be here again.

1:37

OK, so now before we get started, I just want to remind everybody that we do have a question box at the bottom of the screen. So, if you have any questions or comments throughout, just throw them in the chat and we’ll get to as many as we can at the end.

1:51

And I’m going to pass it over to Deborah to get us started on why you need to test your pricing.

1:58

All right, so, thanks everyone for joining us. So, why do I need to test my pricing? What is it about pricing? That’s so important.

2:07

Well, there’s a couple really fundamental answers to that and, Katherine, if you wanted to thank you. First of all, facing is absolutely key to your business’s success. So whether you’re an e-commerce or you’re doing online donations, or even if you’re just doing lead generation and you want to bring those leads and then hit them with the offer after, you need to get your pricing right, and how do you get your pricing right. Well, there are several strategies that we’re going to be discussing today to help you kind of hone in on how to massively position your pricing. Now, why you should test your pricing is because it’s often really easy to do a pricing test. Some test, it’s super complicated, is, do you need to change this, and change that with the patient test, if you do it right, you can just change a small little element, and see a huge gain in revenue, or average order value. Whatever that key KPI, or a metric that you’re going for is.

3:05

So pricing can be easy, It can be effective, and it can really make or break your sales, what we’re going to be emphasizing today.

3:13

and what you’re going to learn is that the way you display your price, and the price tag itself can totally affect the way that Europe, your customers, and your users understand the products and the effect that it has on them, in terms of wanting to buy. And we’re going to be using some powerful, persuasive pricing strategies to help gear you to test exactly what you should be in an easy, simple, and effective way. So we’re going to help you know where to start.

3:47

Yes?

3:51

So you’re probably going, OK, great, So Devers told me she’s going to tell me where I should start, so tell me where should I start? Well, my answer to you with testing, whether it’s pacing or anything, is always start where the opportunity is highest. OK, Well, Great, so you’re telling me start where the opportunities I ask, What does that mean for my business, for my website? There’s a number of really important ways that you can look at, that. You can ask yourself and assessed using analytics metrics.

4:18

What is your highest performing page right now?

4:22

Let’s just say arbitrarily, you have a 2% conversion rate on your highest performing page. Now, that’s not bad. But you want to increase it. If you can eke out another 2% gain on the highest performing page, boom, You have a 4% cumulative lift. And your average order value or revenue has just doubled. If you do it on a low performing page, let’s say, it has a 0.5% conversion rate right now, and you still get that 2% left, well, you’ve only made a 2.5% lift instead of a 4% lift overall. So whichever, you’re gonna go for, the 2.5% lift, or the 4% lift. Obviously, the 4% lift. So, that’s where the opportunity can be highest fear.

5:02

Another way to look at it is by assessing, again, in your analytics data, What has the highest traffic, but low conversion rate ratio, and if you have a very high traffic page, but a low conversion rate page, you can say That’s a great starting point for me. I’m going to test that page and try and optimize it. And then, of course, with the pricing pages, you want to go to your pricing tables, your pricing charts, and the way that you display your prices. Because simply adding a zero, for example, or adding a dollar sign there, taking away a dollar sign, can have a huge impact on conversions. And so those are some of the places where opportunity is highest. And you can use that to your advantage to optimize your pricing structure.

5:48

Awesome.

5:49

So before we dive in, I know that, Debra, you had a couple of things you wanted to point out before we dive into the principles. Yeah, definitely.

5:58

So, I’d like to start off by saying that what’s so powerful about prices that really, ultimately, it comes down to perception so you can sway your visitors’ based on the way visually you present your price without changing the price tag. I was in a client meeting the other day, and he said, Well, we really want to optimize their price elasticity. We need to do these complex calculations and figure out what our ideal page should be. I said, you don’t have to worry about any of that.

6:26

Let’s start simple. Let’s test whether or not you should add a dollar sign or not.

6:30

What the color of the price should be, what the size of the price should be. If you should add zeros to the price and these are all things that can markedly influence the perception of price and they’re super simple strategies and really effective ways to test and bump up your revenue and your sales immediately.

6:50

The other thing is that, whether something is deemed as expensive, or valuable, or even cheap, is truly your perception based on how you market it, too.

6:59

So let’s take a Michael Kors handbag. That same bag, made in China, sold on the New York Street for $50, has the same value as $500. When you buy in the Michael Kors shop, that perception of value is based on the marketing and the background behind it.

7:18

Same thing with a pair of Nike shoes. You can pay $500 for a pair of Nike shoes, though she was probably cost about 18 to $20 to make. But you’ve been marketed to that they are very high value, their prestigious product and you want to pay more to obtain. So marketers can sway the perception of value, and we can do with price as well. And what we’re going to be discussing today is three proven psychological principles, very persuasive pricing strategies that you can use and test to increase sales and revenue on your own site. Now, I do have a word of caution, these principles are extremely powerful. I’m giving you gold by telling you these and revealing them.

8:01

So please, as a marketer, treat them responsibly and handled them ethically, because you’re now given ammunition to really persuasively manipulate your users. And I want you to do it in a very fair and ethical fashion.

8:22

Thanks, Deborah, that is a good point.

8:25

And so, with that, here are the top three pricing principles. And then with each, we’re also going to be sharing a test example that you a test case, any test example that Debra has done in the past and also some tests that you guys can share and do for your own business.

8:44

That’s right.

8:45

All right. So we’re going to play a fun little game here. We’re going to say, can you guess the test? So I have two variants here. This is a real-life AB test case study.

8:55

This was a case study submitted by a Dutch digital marketing agency for their client team mobile. If you’re not familiar with T-Mobile, it’s a huge brand in Europe. They do mobile phones telecom.

9:08

And they were trying to sell intranet packages.

9:11

and they wanted to sell the more expensive, higher priced and the faster Internet package. And they sat there. And they said, well, you know, we could fool around with price, we could change different things. And somebody said, well, what if we change the order of the way that we present the engine at packages? Let’s test it and see what happens.

9:33

So, in this first example, the red box here, the pink box, you can see it’s a 50 megabyte Internet package, it’s offered for free, no price it off.

9:43

Then it has 100 megabytes, seven years and 50%, and the fastest and most expensive goes for 500 megabytes at €750.

9:54

The Version B is flipped. So we have the most expensive internet option at the top, fastest and most expensive, and the cheapest at the very bottom.

10:06

Now, not only did flipping the order, make a huge difference, but it completely drove revenue and conversions.

10:13

So, which do you think one? The one with the cheapest at the top or the cheapest at the bottom?

10:21

So, if we can do a live poll, you can go ahead and take your best guess, version eight, version B, and Todd and Eric, I’m going to throw this one out to you. What do you think?

10:34

Let Eric answer that one.

10:39

Let me answer now let’s say I’ll take the opposite answer. You can say, That’s what I was going to say.

10:46

Yeah, right.

10:47

So that’s a So, if I’m looking at, if I’m looking at the two different ones, I’m looking at Option A.

11:02

OK. So, Option A with the cheapest at the top, OK, and Eric, that makes sense, completely makes sense. Why on earth?

11:13

would you throw the highest priced one at the top for the first thing that they would see, right? You don’t want to scare them off that way, right?

11:21

Millimeter hmm, OK, Todd …

11:25

says Option B, OK, and what’s your justification if you can go in the opposite direction? Besides the ERGs and pigeon, which is the same set, right?

11:41

Aye.

11:43

As, you know, I think sometimes showing your highest prices, it’s the first thing you’re going to see.

11:49

And that’s going to influence, you know, like the first thing they’re going to gravitate to, OK. Interesting. OK, Well I think you guys both have great points. Only one of you is right, let’s go ahead and see who it is, drum roll dented internet today.

12:07

It’s not actually so much about the cheapest option at the top or bottom. It’s about the most expensive option at the top. and as Todd was saying, basically tied you are saying, It sets the reference point, It anchors everything else. So everything below it looks comparatively cheaper.

12:28

And by placing the most expensive option at the top, they actually were able to increase subscription plans by 34.4%. Now, that is huge. If you’re a telecom company and you’re getting monthly, recurring revenue by increasing your subscriptions, 34% translated.

12:48

Sorry. So, 34% improvement is, is option B and nothing else changed on the page, that’s pretty noisy. That was changed on the face. This is one of the most, powerful and effective pricing strategies that I highly suggest. every single company out there, test just, and we’ll go over the theory behind it, But huge, huge, increase.

13:11

And, it translated to enormous revenue for them. So, what’s the psychological basis behind this? But it’s called the anchoring effect, and if you’ve done any kind of psychology courses, Kathleen and I were talking earlier, she did an undergrad Psych. This is a very well researched cognitive bias. So, basically, what it says is that people tend to use the first piece of information that they get as the reference point for making any subsequent decisions or judgements about the item. So, they see, OK, it’s $34, the next one looks a lot cheaper, and only 17. 17, it’s not so bad. Oh, this one’s free. While 34 for faster Internet. Yeah, that’s, that’s not so bad. When it’s flipped the other way and the lowest price item is first you go down the list and you go, Oh, my god, I’m not showing up $34 I can get this thing for free. So, it really truly makes good sense to at the very least test the effect of putting your highest price item first. You’re not gonna give them shellshock sticker stock by putting in at first. You’re going to reference everything else.

14:19

So, it looks comparatively cheap, because I think a lot of times, too, I’ve tested from the standpoint of, no, we have free first, Then you have to overcome that, know, Bankruptcy, you have to overcome what’s better than free, exactly the decision process that they have to go through.

14:40

That’s very interesting, very interesting. Fascinating. I wish I could take credit for myself. I’m just kinda reporting on it. But, yes, I think it’s a super powerful strategy. And I really urge everyone listening to the webinar and every marketer who’s dealing with price to test it.

14:57

Here’s a little bit more on the same with the anchoring effect. It doesn’t stop there. The goods keep going. So not only can you frame and reference price by putting the higher priced item first, but you can also influence the perception of that price by having, you know, a kind of fake price or a sale price that is strike out. Or you cross out in some way. And then the quote, real price is presented in a different way And what this does, it also anchors our perception of the price because we’re very quickly processing and we’re going, OK, the …, I can get it as a special deal for $49. I’m going to grab that $49 deal. It makes you feel good about this exclusive offer that you’re getting. So, it really does plant the idea of the shoot cost this much. But I’m getting it for this comparatively great deal.

15:50

And so, I really, I urge marketers to test the effect of using this strategy.

15:56

It’s sort of a subset of the anchoring theory.

15:58

So, in addition to pricing your items from highest to lowest, having a quote, sale price that you offer to really anchor and position, that price as valuable for the user.

16:11

Yes. Awesome.

16:13

So with that, I’ll just jump right into our next test or principle two.

16:20

All right. So this is a fun one again, I can’t take credit for this one. And this was conducted by … from The Book, Predictably Irrational, fantastic book with a lot of really important insights and this was done for The Economist Magazine and I’ll just kind of explain version A and version B T and then I’d love to have you vote again. So, in this version version A we have a three choice subscription plan.

16:44

As a user, you can decide to purchase the print plan, the print and digital plan, which is clearly labeled as best value, or the digital plan.

16:54

Now, the presses are a bit hard to see, but the print plan is going for 125, the print and digital for 125 as well and I believe that says 59 for just the digital. So, you have three options there.

17:08

Version A, version B, you have two choices.

17:12

You can get the print and digital again for 125, or the digital, just for 59. Now, this is all about choice and the amount of choice that is really going to be valuable to your user.

17:26

So, I tried this one. I’m gonna let you go first, a free choice or be teachers.

17:34

Was going to defer again, but, all right.

17:39

I’m going with Community Eric’s? Going with pizza? Todd, you can go with what Eric said, who’s gonna go? Always go the opposite. It’s fine. Choice option, but that’s an audience. I’d love for you to vote in The chat if you’re able to do that. Kathleen: Can you be the Tiebreaker A or B?

18:01

Well, we have somebody writing in four B, Allen Choses choose B so, I will, I will plead defense since I know The correct answer.

18:13

So, I went with B and Eric, can I hear your rationale?

18:18

A good friend of mine always said, you don’t want to have too much unsupervised thinking, Brian, you know, from a from a reader or a potential customer, So, you limit their options as much as possible.

18:33

No, In the process, so giving them quick choice buttons is, is an easier, you know, it’s, it’s less decision making that you have to do, OK. Fair enough. That’s a good point, Todd, other than the fact that, you’re going opposite of, what Eric said, can you give me a rationale for it?

18:50

Well, you might not know crashing.

18:55

And so, whenever, you know, whenever we used to do this type of testing, I remember having that three pronged option with green, print, digital, or digital typically working pretty well.

19:11

And so, and it’s more of my history than then this solid rationale that Eric provided.

19:20

All right, OK, so, both good arguments. Suppose, you’re standing on solid ground here, …, version A, or B drum roll.

19:31

Version a data set again, all right, So what’s happening here? What is going on?

19:39

Well, first of all, let me tell you the number 84% of people selected the highest priced print and digital, the one labeled as best value. When there was three options. Now, that’s important to keep in your mind. When there was three options, absolutely, nobody chose the 125 principal scription, and honestly guys, unless you’re an old grandfather, still read in the newspaper, nobody cares about print anymore.

20:05

16% of people chose the $59 digital plan, so not that. Now, if you advance to the next slide, Kathryn?

20:14

Yes.

20:16

What happens when we take away that’s their choice, when now there’s only two choices for the subscription plan? Well, interestingly, the numbers almost get inverted. So all of a sudden, only 32% compared to 84% before with the third price are selecting the highest paste 125 print and digital plant.

20:37

In comparison, 68% are choosing the cheapest 59 dollar digital plan.

20:43

Now, that’s an compared to 16% with the three options. So as I mentioned, the options are nearly inverse.

20:50

Yet, nothing has changed except we’ve taken away one option, So what on earth is going on here? What is happening?

21:00

We can attribute this all to what’s known as the decoys effect, another psychological principle that you can use to apply to your own pricing and your pricing tables in particular. So, we’re going to call this a close cousin to the anchoring effect and I love to use it in tandem with the anchoring effect, especially in pricing tables.

21:19

So basically what it says is customers are going to choose between two options when they’re presented with a third one that isn’t as attractive. We’re giving them a decoy. We’re throwing one in there that we know they’re gonna say, I don’t want that one, Print in this day and age that choosing that. But what we do is we get their decision, making juices flowing. We have them make a choice. The choice is to not get print, OK.

21:48

Now they’ve made that choice so they can go onto the next micro conversion step of do I want this one? Or do I want this one? I’m gonna go for this one. The print and digital. That’s the most attractive option to me so we push them to choose and to make a decision. by giving them a decoy. They can easily eliminate. There’s not a lot of thinking and saying, I know I don’t want that one.

22:11

So, that’s what we’ve done with the Decoys.

22:15

Now, I’ve taken, oh, sorry, back one slide, this chart from opt in Monster?

22:22

Often monsters, a popup provider, and we’re going to be looking at their chart a little bit more.

22:29

The presentation, I’m not so sure if they’ve tested this chart or not, based on what we’ve already talked about. Can anyone see something that they would test?

22:43

I’ll give you the order of the pricing.

22:48

Reversing them starting out, What do you got? It? You got.

22:52

So, now, I’m gonna give them the benefit of the doubt and say they’ve tested it. But often, Monster, if you’re listening, make sure you do test it.

23:02

I would strongly suggest they put the 49 first and then everything else in descending order from there. Right now, when you’re hit with the $9, that’s probably going to be the one most people choose, because 49 seems awfully expensive in comparison.

23:15

The other interesting thing that they have going on here is they have four choices, and it makes it a lot harder to eliminate, know, 1 or 2 of those that you really don’t want. But I’m assuming, again, giving them the benefit of the doubt that the Plus and the pro for 19 and 29, which for any similar to each other, one of them is actually a decoy and they don’t expect you to go from one of them. So it’s a de Croix intentionally put there to try and get your decision making juices flowing. So, you do choose either the cheaper or in the more expensive plants that are out there.

23:50

The robots, what what’s your thought on their strategy of, like, I’m highlighting one of the four choices was most popularly.

23:59

I do have the color background a little bit on that. So, I think, I think it’s a great idea, and, just draw your attention to it. And, it kinda uses the idea of social proof that everybody else is doing it.

24:14

So you should do to, To get this plan, I also really love that they have the anchoring of the strike, or the crossed out, no quote, sale price there. So, I think there are some really good elements on this chart. But there’s also also some aspects that I think they want to be testing here, as well.

24:33

I love the concept. Like there’s always little, subtle things you can do that.

24:38

Keep testing.

24:39

You know, your testing process is never finished. No?

24:43

Ongoing optimization, for sure, continuous optimization really is the key to success and you can drive large gains off of, you know, You can get a 30% lift and still get another 30% lift if you are testing the right elements.

24:57

So it can be a very exciting opportunity that you can know eek out of these types of things Awesome, that’s so exciting. OK, so now we have one last test, alright, so this is myself. This time. Alright, so here we have a real life AB test from the World Wildlife Federation.

25:25

Their goal clearly is to get increased donations.

25:29

And they wanted to know, should we use a blank box format, where you input the amount, whatever amount you want to, or should we use a preset button format? And, you know, basically highlight what we are suggesting the user donate. Now, before we even get into guessing, just based on this and what we’ve talked about so much so far, do any of you see anything that you would now immediately test?

25:56

Yeah, the pricing for sure, Sorry, Now, with the higher order on the right side, starting out with the hard donation mark.

26:03

Got it. That’s exactly it. So, I’d really suggest they test that, because it could be really beneficial for them for increasing donation amounts. They didn’t have the luxury of listening to this presentation. So, they’re stuck with this right now, until they take, Todd, you’re testing advice into consideration. But, for now, we’re just going to focus in on what do you think one for pricing?

26:25

The blank box, format, version A Or the pre-selected button amounts that you could simply tap on, and choose.

26:35

If you’re listening, you go ahead and tell us what you think.

26:38

But, I think, Eric, you have to go first. For this one, I have to go first.

26:45

For the same reason, as my previous answer, I’m going with option B, OK?

26:51

And the reason why I’m going with Option B, is, it’s, to enter in the number is sort of too much thinking, right, So you want to have quick selects.

27:02

OK, OK, that’s a fair rationale, Eric.

27:04

So, Todd, do you want to go with what Eric said, Are you gonna play the wild card and I’m gonna, I’m gonna go with Eric. This time, it’s, the first time, it’s ever happened. All the listeners out there. What’s the rationale?

27:23

You don’t need it.

27:24

The highlight of the $15, really? Yeah.

27:30

Pushes you to that number, And so through their analysis, if they see that that’s a no, the most likely for people to donate, um, they’re trying to push people to 15 and I would say that that does a pretty good job.

27:47

Making it very easy for me, and kinda directed me to the path that they want me to go, OK, But if I want, if I really want $100 from people, wouldn’t it be better to have a blank box, that would let me just type in $100?

28:01

Well, it’s funny, because I have plotted If you wanted to have like the outlier, they have a higher price on the right somewhere.

28:09

No, becomes.

28:11

But, Right. Kind of risky territory, you’re agreeing with? Healing.

28:20

But the odds are not with you to say, from our attendees, we’re also leaning towards B So, sure enough, well, let’s address the elephant in the room.

28:33

Given the screenshot and …. And you got a well done is, indeed, Version B with the preset buttons.

28:43

So just, as you said, just as your colleague told you, that one time limit choice structured very preset choices will markedly likely markedly increase your donations. And just by using this clickable button format, rather than the open box format, it really had a huge effect. So, transactions increased 30% total revenue, 15.6, just huge, And revenue point visitor 14.7. So these are huge, important. And just run on metrics. And strong confidence, 95% confidence. So what is going on here? Well, you’re definitely delving into Eric when you talked about limiting the amount of thinking the user has to do and the amount of choice. So this is known as the paradox of choice. And it’s not a pricing principle per se, but it really relates to price.

29:32

Especially when we get into pricing tables and features and benefits that we want to offer a user with that price. So what it is is a psychological phenomenon, and basically it says, When we reduce choice, we reduce shopping and anxiety, and we help prompt conversions. And there’s a really interesting study is called the famous Gem Study, and, basically, it was conducted by researchers at Harvard and Columbia University. They set up a real-life AB test experiment at superstar, like a shopping stores grocery store. back before covert when you could still go to grocery stores without having to wear masks, and do online checkouts.

30:14

And they had a sampling station with fewer gems, and a sampling station with more gems, And, if you give me just a second, I’ll pull up the exact numbers, so I can tell you.

30:25

Um, so the first station had 24 flavors, and the other one had only six. Now, based on what we’ve talked about so far, Eric can talk. What do you think happened at the 1 with 24 flavors? Just throw a guess out there.

30:45

I would imagine that most people looked at it.

30:51

To make a decision and just moved on to the candy Can forget Jam, I want candy anyway? So, yeah, yeah, absolutely, right.

31:00

So, way more people stop to sample the job, they said, oh, 24 flavors of Gen. This is amazing. But markedly, only 3% of people actually made a purchase at that stem sampling station with 24 a chance. Now, Eric, what do you think happened at the station with just six flavors?

31:23

I would, I would say something similar that’s still seems like a lot of flavors, like a lot of options, OK.

31:32

So better, but better than the.

31:34

Than the larger group.

31:36

Yep, you’re definitely right, so fewer people actually stopped at the station. They only saw six flavors, I know that’s not quite as exciting, but of those who did stop an incredible 30% purchased at least one jar of jam.

31:50

So, you can see, we cut the choices of Jim, vote by quarter from 24 to 6, and we increased essentially conversions by 30%.

32:00

So essentially, the takeaway here is the smaller selection generated more sales, And the theory behind it is that the smallest selection works, because if you look at the largest selection, just overwhelmed shoppers to the point where they weren’t able to decide, so they couldn’t make any decision at all. They just said, Forget it. I’m not dealing with Jam. Let’s go on to ice cream or candidate, as Todd said.

32:27

So, so that’s fascinating to me. I really mean this of the tests that we’ve talked about so far. That’s fascinating, because you see.

32:39

Sort of?

32:42

Marketing activities. And then you see conversion rate optimization in both of those scenarios, right?

32:49

So there’s marketing activities that gets you to stop and pay attention and raise your hand, right?

32:55

So you think of that like, your ad, right? So it’s either a disruption or somehow captures your the, the prospect’s attention.

33:03

Then when you hit the, you know, you lead them to a landing page.

33:07

You’re focused exclusively on one thing which is that call to action, right, and optimizing around, you know, the goal and the goal is to get more conversions.

33:17

So if you had something that had 24 Yeah.

33:21

I’m making this up, but like A, know, A, eight an ad that had, you know, 24 options, right? Or like showing selection.

33:30

That’s impressive let me click on that, and then you hit the landing page, but you limit down the number of options for somebody to be able to make a selection knowing no knowing the psychological principle around CRO.

33:45

That’s, that’s fascinating.

33:46

Yeah, Yeah. Yeah, definitely. And that’s the amazing thing, about these things they can all be applied to. You optimize your landing pages, or whatever it is that you’re trying to do. So as essential principle, you really want to think about, Well, how much choice do I get my user?

34:01

And just like your colleague said, I don’t overwhelm them with too much choice, because limiting choice is going to reduce purchase anxiety, and ultimately, make the job easier for the buyer. They’re going to be able to make that choice a lot easier, and a lot more simply by having less selection. So, now we get to the question. OK, so Debra is telling me less selection, Erica Seconding, that Todd saying, Yes, I agree.

34:26

But how much, what? What does the ideal amount of choice I need to know this? Give me something definitive? Well, there’s research that tells us that three is the ideal number.

34:38

In fact, three, charms wears for alarms. And this is sort of an idea that’s been tested. And that’s what I call the cognitive bias bias of choice.

34:49

So you have too much choice. People get overwhelmed. On the other hand, you have too little choice and you use what’s called the Hudson’s effect and you tell somebody take it or leave it. And they feel like they don’t have any choice at all, or unemployed, or disempowered.

35:06

And that loses the conversion because they haven’t been given the opportunity to make the choice. So we need to feel like we’re giving the user freedom, and not that their freedom is taken away, But if we go too much choice and too many options, we start to elicit skepticism. And there’s research that backs up. That’s three seems to be the ideal number. Now, it’s looking specifically at persuasive claims. So, we’re abstracting a little bit when we say that three is the ideal amount. But, lucky number three seems to work really well from a pricing and the pricing table standpoint.

35:46

That’s the rule of three I guess that’s kind of like a lot of people kind of all into that camp, even without knowing it just from that being kind of a well-known.

35:57

Exactly. And if we look at what we talked about with the decoy effect and the Economist Magazine and the Print and Digital subscription we can use three as a really valuable strategy to create one of those three choices as a decoy. And then the other two are actually what we’re getting the user to choose between.

36:19

And then we have sort of an ideal situation because the decoys says, OK, choice eliminated. I’m empowered. I’ve made that choice to eliminate it, my decision making juices flowing. And now I just have to decide between A or B?

36:34

Yes, that’s awesome.

36:35

That’s almost like the pricing too, 201, that’s like a combination of all the principles. Yeah, they build upon each other.

36:44

So I’ll move past that since we’ve covered all of the time.

36:50

OK, Cool, Principle three.

36:52

So in some too many choices stifles decision making. Even if one of those choices in Detroit Now, this is not based on research. This is based on my opinion of what I’ve seen my decade of zero experience. But we’re gonna go back to the opt in Muncie pricing table and I said there’s some things I like about it and there’s some things I’d really recommend they test.

37:15

What’s something now that jumps out at you now that we’ve talked about all these things?

37:23

Lucky number three, right?

37:25

Got it.

37:26

What are your choices? You got it.

37:28

So I believe they probably have a decoy in there. I’m giving them the benefit of the doubt that that $19 is a decoy. However, when at that decision, be so much easier for you if that 19 just wasn’t there altogether.

37:43

And we could choose between the basic, the pro, and the growth. And we were guided to choose the pro because it had that social proof.

37:51

It had the most popular item there. I think it can really kind of optimize the structure of the pricing table. Of course, we also want to anchor the process so that the highest is presented first and that sets the reference point for all the other prices to look comparatively cheaper. So, when we do push that $29, most popular, people are onboard, OK.

38:13

I can show $29, because I’m not going to pay 49 mmm hmm.

38:19

Awesome, so, I will jump back here into this. You got a little altogether. This is from years of coalescing. All this research and putting it together, I really do think that I’m able to share with you the ultimate formula for a high converting pricing table. And basically, it has three elements and, of course, it has to have three. You anchor the prices from highest to lowest. That’s first and most fundamental. Now always test these things before you implement them yourself.

38:50

But test the effect of pricing highest to lowest.

38:54

Second, include a decoy to ease the selection process. And third, make it. so the three, charms. there’s no more than three, and one of those is a T coil. And I really truly believe that if you can implement those two things, you have the formula for a perfect pricing table.

39:14

I’d love for you to test it yourself and share the results.

39:17

Yes, and you guys do in-depth testing, or if you have questions on how, feel free to share them here. Or if they come up later, e-mail them to Deborah or find one of us on LinkedIn.

39:28

We’ll be more than happy to share and answer questions now, many more strongly say, I mean, I think you have to test, right.

39:35

The mean, those are guiding principles, and I think you can start by looking at your pages now, determining, know, what are you doing, or what are you not doing based on those three principles. But, I mean, it wasn’t comes down to the testing, right. Because you never know what will work on your website with your audience, with your demographics. So, absolutely, Testing testing.

40:00

So now we can have a little bit of fun. We get to turn on other people’s websites randomly. These are some sites that I’ve come across in my journey.

40:09

and I’ve looked at the pricing structure, their pricing table, and I’ve got, oh, man, they need to listen to this webinar. They need to test it. So we’re going to have a little bit of fun, based on what we’ve talked about today. And let’s see if we can optimize these pricing pages for them.

40:29

I’m just going to start out with the top one, which is pipe drive.

40:32

All right. Then you’re able to view this, OK?

40:36

All right, sounds good. So, you know, I have some things that I think really need to be on this facing table, or maybe shouldn’t be on this pricing table. But Todd and Eric, based on what we’ve talked about today, I’d love to hear your thoughts.

40:54

Right, I’ll go.

40:56

Yeah, So, hold on one second. There we go. I clicked on it.

41:04

All right.

41:04

So, I would say that we have an anchor problem. Right? So, we want, we want to have some pricing that’s that’s pushed up.

41:16

And then also, we have four options and not three, OK, so we’d want to limit some of the choices, I would pick those two things, OK, very good.

41:30

This is a little bit off from our discussion to that.

41:35

I would question or really test that you get down to three versions, because you’re going to use the enterprise.

41:41

Um, that’s the black background?

41:44

doesn’t, seems very.

41:48

I’m gonna try different color on that background, too.

41:52

I completely agree with you.

41:53

Yeah, I think that black background blacks it out in your mind. So, I mean, we haven’t talked at all about the psychology of color, but I’m sure everyone knows color can have a huge impact on conversions. And when you black something, you’re basically giving the message to the use it that they can kind of ignore.

42:12

I think they were, I’m speculating here but the intention likely was, black as a prestigious color signifies luxury and authority and so they’re trying to say this is for luxury, high-end clients or enterprise level. But actually, in effect what it does is it kinda makes you ignore it almost acts as a decoy. In that sense, but because this four options here it just really kind of throws you off. There’s also a lot of color going on. This, the black, there’s the white.

42:43

The green recommended bar so it’s hard for the eye of the kinda zone in on exactly what’s happening. And I think the pricing structure could really benefit from a decoy. In the sense that there’s a crossed out quotes, sale price with the actual price listed underneath.

42:57

Another thing that we didn’t talk about in the webinar, but I’m gonna give you as an extra live a bonus tip, is you really want to test the effect of what are called non insignificant zeros at the end here.

43:10

So the 99 dot 0, 0 price, and see if you really no need those, those extra non insignificant zeros.

43:20

From what I’ve been able to tell, the best way to handle non significant serious is to put them on your price. If you want to emphasize the sale benefit of how much the person is saving. So if you are, for example, hosting a conference and tickets are going for $199 and you want to emphasize that they can save $99 on the ticket price, you want to add those zeros because it makes the amount look bigger.

43:47

If you want to charge somebody for something and you want to make the price look smaller, take off those extra zeros.

43:55

It will really help make the price look visually smaller and therefore be a little bit more palatable to actually purchase the problem.

44:04

Any question on this?

44:07

If, If you’re constructing like an advertising campaign, and so you’re going to have ads were coming out to push the traffic To this page.

44:16

one, would you recommend putting in the price one year On your ad And then also, if you do, would you put, like you anchor price, show does count? like any, anything you have, like, just kind of give people direction on that side?

44:36

Yeah, so, that’s a great question.

44:37

So, what the research kinda dictates, is when you should show your price is based on the value of your product or the value of your price.

44:48

So, if your product is a luxury item, for example, or perceived as a luxury item, and the price tag is pretty high ticket, what you need to do is you need to draw people into your funnel. First, you need to get them really excited about this product. It has to be indispensable in their life, they have to feel this emotional connection with it, I need this, I want this, I can’t do without it. And then you hit them with the price, Boom, oh my God, it’s going from $5000, I don’t know if I can afford this, I have to have it, it becomes an emotional irrational purchase and they spring for it. Even if they don’t really have the money, because they are so involved in the product and the emotion that’s gone behind it. So, you present the price later. If it’s high ticket, very emotional. Now, the flip side of that, let’s say you’re selling dish soap something. Pretty utilitarian and non discretionary item. Everyone needs to.

45:41

So, if you have the cheapest dish soap around and that’s your value proposition, you want to be showcasing that your value is the price. You’re only charging $3 for you. Just so everybody else is charging five. That’s your value. You put the price up front and center because that ultimately is what you’re selling.

46:03

So, I think I’ve kind of indirectly answered your question that it depends on the product and kind of your whole sales cycle and sales funnel.

46:12

That’s great, thank you.

46:14

I have one more question from, from Kim, who just wrote in about this page. So, if you find that you need three different prices for individual users, and then you also want to have a separate enterprise price, do you suggest laying it out differently? so that the enterprise option is a button, Or how would you do that? Yeah, so I would probably have Enterprise up front and center, I presume ultimately, that’s what I really want to sell. I’m gonna get the most money if I’m selling Enterprise. So I would actually put it where essential is.

46:46

Flip the order of it. And then as Eric Recommended Professional would come next and advanced and essential which follow after that. I would get rid of one of these. Probably the advanced I consider that quote, the decoy. know, you’d have to figure out what you’re getting rid of based on how much of the plan you’re selling and stuff like that. But I get rid of one of this. So there’s only three options. And I would make that Enterprise black, integrated with the rest of the pricing table. So they’re all white. And then it’s going to feel part of the pricing strategy and then enterprise people aren’t gonna feel so kinda shutout. So I’d also look at the contact, the Call to action buttons. Try it for free, try it for free, contact us, and see if there’s more optimal wording for those.

47:36

In general, you want really low friction verbs that start your call to actions so that people feel engaged and that they can easily jump into taking back stefania pricing funnel.

47:51

So um, one more question before we move on to our nest. Before our next example is from Lead, what about using whole numbers?

48:00

So $50 versus 49.9.

48:04

That’s a great question, 125 versus tweak. It really depends on the product, the sign, and the way that you can position that price.

48:12

So if you, for example, have a $99 product, then can actually be beneficial to, say, 9999 that 1% difference between 1999 and 100 just gives the perception that it’s a comparatively great deal. And it nudges that perception of value.

48:33

There’s some really interesting pricing psychology research with the numbers themselves and in general, an odd number tends to convert better, So for seven, sorry, four is now about 5, 7, 9, those numbers tend to convert better as well. If you happen to be a very personalized company and you know a lot about your user demographic, there’s research shows that people’s birthdays, they, when they see numbers that are associated with their birthdays, they tend to resonate better with those numbers and they’re more likely to buy as a result. So if you can tap into that information, you’re doing really well. And then lastly, the longer the number is to say out loud, even. If we’re just reading it, we tend to verbalize the numbers in our head. The longer it is to say, the bigger, it seems.

49:24

So when you’re choosing numbers kind of arbitrarily, or you have a little bit of wiggle room with your price, you want the fewest syllables in the number because it makes like the price seem less. And just as a great to lessen a syllable is a unit of sound. You can clap a syllable. And so you want as few syllables as possible in your price.

49:49

So, so interesting, I have not been going on before.

49:52

Yeah, that’s right.

49:56

I don’t think I had either. So, something like 9.

50:02

9 is odd, single syllable, and what’s great about nine is it’s not quite temp, it is not quite 10. That’s true.

50:10

That’s like a perfect race right there.

50:13

Yeah, yeah.

50:16

That’s very interesting already, so.

50:19

Yeah, all that happens to be, on February ninth, you’re golden.

50:25

Say we’re all going to be slapping are crazy. Because you sit there. You’ll be in marketing meetings and everyone over 16, 9? No, no, no, I think we’re working them to her look.

50:42

So we’ve kind of already gone over often monsters are kind of in, the better, very joke the whole time.

50:51

So, stock charts dot com is our, our last example here.

50:56

Oh, shall I go to here, Free trial.

51:00

Sure, Should have been the pricing page, but I guess we ended up on the homepage. So, just a little bit of interesting background on stock charts dot com.

51:09

Prior to getting into the Sierra and AB testing world, I actually was a financial writer and I chose US stocks And I made many winning stock facts, and my only regret is I didn’t buy them myself. I gave advice to other people, I found Tesla at about $12, and Netflix at about 14 and these $100 stock. So I didn’t buy them, the people who followed my advice, probably profit at a lot. But I used a combination of technical and fundamental analysis, which is basically analyzing the stock chart and the balance sheet to figure out what a good stock pick would be. And so it was a very data driven approach to choosing stocks, and I relied heavily on this company’s stock charts to look at the stock, and to decide if it seemed like a good stock buy or not. And so stark choices near and dear to my heart, and if anyone there is listening to this webinar, I’d like to be able to help them out by discussing their pricing structure, and how maybe they can test and optimize it.

52:11

Awesome. OK, so I’ve found their pricing page.

52:16

Is this similar to Sarah?

52:22

Maybe take off the where it says question mark Campaign and just go to Pricing itself, because they should have a pricing table.

52:30

Yes.

52:35

Here we go. Is this? It looks like this similar table.

52:41

Yeah, OK. Well, let’s, let’s go with this. I think I had maybe seeing something different earlier, but that’s all right. There’s enough to go with here. So.

52:51

Based on what we’ve talked about, and everything you see, what are some things that now hit, Yeah.

52:58

The anchor flippin the fruits, the left side of your page.

53:03

Thank you.

53:06

To knock down one and decide, which is your D coin, say it again.

53:13

Excellent.

53:15

I would say, it feels like to me like there’s too many line items.

53:19

Like, maybe it needs, like, a, know, the It and expand option or something like that to drop them down in, into details or into groupings.

53:29

I completely agree with you.

53:30

So if we go back to three charms for alarms, I think there’s way too many quote, persuasive claims here, to actually be compelling. So, you know, I may be interested in all these features, but I’m not gonna scroll down the entire page, delineating line, by line going, oh, this 1 this 1 doesn’t, oh, wait, this one has a 15 second Auto refresh and this one size. It’s just too much for the user tap to decipher.

53:57

So the three most persuasive claims, and then probably a link, or a CTA, if somebody wants to see a more detailed pricing chart, would really be beneficial in addition to everything Todd very eloquently said.

54:10

So those would be someone who’s going to approach quite a bit, um, especially with software products.

54:19

Yep, yes.

54:21

And so, I’m not going to say it’s wrong, but I do think they should test it.

54:26

You can say is wrong, or at least moving them up, so then, differences are highlighted at the top, versus having the first 10 rows be identical for these three plans. Right now, that’s where I was, especially since you already have to scroll for this.

54:39

That’s something that into my mind, definitely.

54:44

OK, so if there are any more questions associated with any of those examples, go ahead and drop them in.

54:52

But we will just go ahead and move on.

55:00

So this is a resource that Debra has actually created, Antonio. She’s really excited to share it with all of you.

55:06

And I will slide a link into the chat so that you guys can access this today, and you get a deal on it, But I’ll let Debora tell you a little bit more about it.

55:17

Sure. So you can probably tell, I’m pretty passionate about pricing and talking about pricing. I find it really fascinating. And it’s so powerful. And yet, it can be so simple, And that’s what I love about it. As I mentioned at the beginning, other AB tests can be really hard and complicated, and a lot of dev setup, and that kind of thing. But it can be really simple to test your price or flip, and the anchor the pricing structure of your table, these kinds of things.

55:41

And so I’ve created a 79 page guide on these kinds of things, where you’ll learn way more about the principles and the persuasive pricing psychology practices that go into it. With this guides, you get extensive checklist, a pricing ideas, that you can test for yourself. And I think what the best piece of work I’ve ever done to date, which is a synthesis of all the pricing principles that I’ve come across, and how you can apply them in terms of testing ideas and inspiration. So, I think it’s a really valuable resource, and I’d like you to have access to it. So, as a special exclusive offer for anyone who’s on this webinar today, you can grab it for 14 99, And I think Kathleen is going to send you the link. Now normally goes for 2999.

56:28

You can see that I have crossed out this anchor price that thank you faces in red to draw your attention to it. And I have put 499 in small fires.

56:40

Why haven’t they done that? Any thoughts on why I did that?

56:44

It’s such a small price.

56:46

Exactly, you gotta talk, the visual presentation of the price, is gonna anchor, or change your perception of the price. So when it’s visually presented smaller it appears smaller.

56:57

Nice. use of odd numbers like that 79,999. Exactly and I wanted to you know have a decoy that presents the sense of value which truly really is. It will be the best 1899 you ever spend. And it truly does go from 2999 for anyone not listening to this webinar so it’s not a fake sale face. It is a true sale price. But I put that in there to reference your perception of value so that you can understand what a great deal that you are indeed getting. And as well, if you’re interested in pricing tests and AV studies looking specifically at pricing, there’s a link that Kathleen can share with you. And you can access over 12 pricing tests that are available.

57:42

Yes, thank you, Debra, for all of that. I will send the link is in the chat for all use to see for the guide. And then, all of the links with all of this in all of the slides today that you’ve seen will be sent out an e-mail, as well as on our blog after today.

57:58

Perfect. So, with that, we’ll just do a last call for questions.

58:03

And we also just want to let you know that Debra is opening herself up for questions as well, specifically related to testing, and her e-mail is here.

58:12

So, if you have any ideas later, go ahead and shoot her an e-mail or find any of us on LinkedIn.

58:20

Definitely.

58:21

And with that, we, unless we get some questions in the next NaN, we will go ahead and bid you all to do.

58:30

But make sure to check out our blog on Perfect Audience and our event page for our next upcoming webinar, and look out for that invite.

58:39

So, with that, I just want to say thank you to all of our panelists for taking the time today to come and share so much information with the attendees and me. I definitely learned a lot from this as well.

58:49

So it’s been fun.

58:52

Well, happy testing, everyone.

58:54

Thank you, Debra. This is great. Thanks very much. Bye, everyone. Bye. Bye.

<a href="https://blog.perfectaudience.com/author/kathleen/" target="_self">Kathleen Davis</a>

Kathleen Davis

Digital Marketing Coordinator - Perfect Audience: Kathleen is an enthusiastic marketer experienced in marketing automation, campaign management, and digital analytics. She's previously worked on direct mail campaigns, spear-headed lead generation efforts, and managed a team of interns at SharpSpring.
Post categories: Perfect Audience, Webinars
Post tagged with: A.I., Eric Stockton, Webinars

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