The Science of Pricing: 7 of the Best Product Pricing Strategies [Infographic]

625 Flares 625 Flares ×

The Science of Pricing: Pricing Strategies to Increase Your Sales [Infographic]What’s the best price for your products?

Choosing the right price for your product can make you get a headache.
Pick a low price and you’ll earn too little from your sales, pick a high price and you’ll sell only a few products.

Well, to tell the truth, it’s even more complex than this.
For example, do you know that having a single price instead of a few pricing plans will make you lose money?

Do you know that having a free plan will make you lose money?

And more important, do you want to increase your income?

The following infographic will show you 7 of the best pricing strategies that will make your sales go up.

The Science of Pricing - Infographic

Share this Infographic

I encourage you to share this infographic on your site, just give the attribution to Blog Growth linking to this post.

People will say thank you for sharing such useful information.

 

1. Decoy Pricing

The Economist was offering 3 types of subscription: web ($59), print ($125) and print+web ($125).
Dan Ariely was curious about this kind of pricing plan so he conducted a study offering these 3 plans to 100 MIT students.
It’s interesting to notice that 84% of the students took the print+web subscription and the remaining students took the web subscription; no one took the print only subscription.

Dan deleted the print only subscription and repeated the experiment with other 100 MIT students. This time the majority of the students took the web only subscription (68%).

The middle option was a decoy: it was a less attractive version of the last option (print+web) with the result of making people think the last option was a great deal.

When you add a less attractive version of one of your options, people will compare the two. Of course, if the two options have a similar prices (or the same price) people will consider the best option as a good deal.

You can hear Dan speaking about this concepts here in his TED talk (starting at 11:10, but all the speech deserve to be watched):
[ted id=548]

2. No Dollar Sign

A study was conducted at St. Andrews, the restaurant at the Culinary Institute of America, in Hyde Park, New York.
Researchers decided to test the price format on the menu.
They tested three formats: dollars and cents numerical format with a dollar sign ($00.00), numerical format without a dollar sign (00.), and scripted prices (zero dollars).

The scripted prices and the “normal” formats didn’t show significant differences while the number only format showed an increase in sales.

In other studies has been showed that payments trigger pain and the pain has been associated with the money signs over time too. It seems like removing the money sign can reduce the pain due to payments.

3. The Magic 9

In many studies has been showed that price ending in 9 can increase sales.

One of these experiments has been conducted by University of Chicago and MIT.
Three versions of a catalog were made. Each of the catalog included a different price for the same women’s clothing item: $34, $39 and $44.

The result was really interesting: more items were sold at the price of $39 than at either of the two other prices.

Some researchers explain this by the fact that prices ending in 9 has been part of discounted prices for a long time, so they have been included in the subconscious by people who currently see price ending in 9 as good deals at an irrational level.

4. Size Matters

Marketing professors at Clark University and University of Connecticut found that consumers perceive sale prices to be a better value when the price is written in a small font rather than in a large, bold typefaces.

The explanation is that in our minds, physical magnitude is related to numerical magnitude.

It’s the exact contrary of what many marketers do: they write discounted prices with a bigger typefaces than the original, while they should do the opposite thing.

5. Anchoring

William Poundstone, in his book Priceless: The Myth of Fair Value report an experiment in which researchers invited real estate experts and undergraduate students to appraise a home for sale.

Both students and real estate experts were divided in 4 groups. Each group received a different listed price for the house.
Both students and real estate experts made different evaluations based on the listed price: the higher was the listed price, the higher they appraised the house.

6. Delete Free Plan

Ruben Gamez, was offering both free and paid plan for his product.
Only 1% of the users was taking the paid plan and of the remaining 99%, only the 0,8% was upgrading.

He deleted the free plan and as a results he got a 8x increase in the number of paid users (which is a 800% increase!).
At the end of the month he even reached a 10x increase in the number of paid users.

7. Bracketing

Researchers run a few tests about beer pricing and they got some interesting results.

At first they gave people two options: a bargain beer at $1,80 and a premium beer at $2,50.
80% of the people took the premium beer.

Then researchers introduced a third beer a run another test offering: a super bargain beer ($1,60), the bargain beer at $1,80 and the premium beer at $2,50.
This time 80% of the people took the bargain beer, and the remaining people took the premium beer – no one took the super bargain beer.

In the end, they run another test replacing the super bargain beer with a super premium beer at $3,40. This time 85% of the people took the premium beer, 5% took the bargain beer and 10% took the super premium beer.

The conclusions were that:

  • when you offer three options most of the people will take the middle one
  • certain people will take the most expensive options, no matter the price

Conclusions

Be smart about your pricing strategies: they can seriously increase your sales.
Applying just one of these pricing strategies may have a big impact on your sales, so try to put them in action.

If you liked this post, feel free to embed the infographic on your website giving credits to this post as the original souce. Thank you!

Mauro D’Andrea

Name: Email:

Comments

  1. Extremely valuable infographic. It is both helpful and useful.

  2. I love that beer example Mauro! Very cool proof that choices matter – quality and number of them.

    Three seems to have been a magic number for a long time – good, better, and best.

    Too many marketers neglect this wisdom by only offering one choice rather than thinking about how to make it easier for their prospects to give them a vote of confidence by opening their wallets and minds to them.

    • Hi Lewis, probably that study about beer is the most useful in the entire infographic :)

      I agree, but I’ve never seen “3″ for a marketing purpose…which makes me think given that Walmart made lots of study about number and sales.

      I love the way you called sales, “a vote of confidence”! It’s the true meaning of a sale.

  3. Harry says:

    Mauro – Excellent Infographic on pricing. Small business owners can adopt many of these strategies to maximize their profit. I have seen Decoy Pricing being used in number of places. The one on No Dollar Sign is interesting. Not sure why or how it works.

    • Thank you, Harry!

      It has been proved that payments trigger a part of the brain which is employed in pain signal. Yes, when you pay, you feel pain.
      That pain has been associated with the money sign (dollar, euro or whatever) over time, so if you remove the dollar sign, you’ll decrease the pain.
      It’s really interesting, isn’t it? :)

  4. VERY nicely done, Mauro; from Slideshares to infographics – my dear, you are full of surprises!

  5. JLRDB says:

    Hello Mauro, very well done and informative as usual. will forward to my students.

    how would you treat the picasso paradox in pricing?

    best

    • Thank you! I’m glad you found it interesting.

      I’m sorry, but I’ve never heard about the Picasso paradox…Can you explain it to me?

  6. Hey Mauro,

    I found out about your blog from Ana’s post on SlideShare. These are some of the most straight to the point and actionable points I have ever seen in a post.

    I thought it was very interesting that having a free plan hurts your hurts your sales so much, because having a free plan seems to be such a common practice.

    Did the study take into account people who used the free plan for a few months and then moved to the paid plan, or was that a negligibly small number?

    Anyway, awesome post. Glad I stumbled onto your blog :)

    - Mark T.

    • Hi Mark and welcome to Blog Growth. I’m glad that you liked this post.

      Ruben didn’t mention the exact time that users was spending before upgrading, but I think he means that among all of users, only the 0,8% of them was upgrading from free to paid monthly.

      I think that’s also interesting to notice that this study is about free plans and not about free trials. I guess that a free trial could only help conversion.

      Thank you, Mark!

      • @Mauro – Nice work on the infographic! Love what you’re doing with the blog :)

        @Mark – Yep, as Mauro mentioned, that 0.8% was ALL users. So I wasn’t limiting to a specific cohort. I’ve seen similar numbers when other founders have ran experiments with removing their free plan.

        • Thank you, Ruben!
          I’m glad to see you here. By the way, thank you for sharing your test, it was really useful and interesting.

  7. Great post and top info-graphic.

    My First hand Pricing Experience…

    I have a golf product (e-book, videos and e-lessons series). Originally priced at $47 plus an up-sell of $21 and then changed to $10; both offering a few e-books and videos; both worked horribly 2 out of 10 conversion.

    I scraped the up-sell and introduced the same standard $47 main product on the sales page, plus a Deluxe product at $57 offered next to each other on the pricing page after sales page. The $57 product offered much less than the original up-sell. 9 out of 10 people take the $57 product.
    20% increase in revenue thank you. The same applies on a sale for these products I have in my sales funnel for people that didn’t purchase the premium offers; $22 versus $29-Deluxe. 9 out of 10 take the $29 Deluxe.
    So as of today (maybe if I get myself into gear) $29 will become standard and $35 will become Deluxe. I will also raise the $47 and $57 up to $49 and $59 and maybe even $57 and $65…. we wait… then we check the data!

    Cheers,
    Anthony

    • Thank you, Anthony!

      This is great! Thanks for sharing your experience with us.
      I guess that having only $10 as a difference between the two pricing plans is taking advantage of the decoy pricing: a $10 dollar difference is quite small, so people prefer to take the deluxe version.

      It sounds like a good plan, let me know how things go ;)

  8. Super insightful post. I really love the style of the infographic as well. Thanks!

    • Thank you, Eric! Well, we should say thank you to Donna Moritz and her team at Socially Sorted for such a masterpiece.

  9. Great post!
    The image is simply awesome! :)
    It was all informations that i knew, but it’s been a good ripetition… perfect for this moment, that we have to launch a software! :)
    Have a wonderful day!
    Josè

    • Thank you, Josè!

      The credit of it goes to Donna Moritz and her designer Deb who did an excellent job.

      Well, good luck with the launch ;)

      Thank you, you too.

  10. PS: sei italiano??

    • Si.

      • wow, complimenti! :)
        hai anche qualche progetto in italiano?

        • Grazie Josè!
          Al momento no, ma in futuro conto di farne (un po’ mi manca lo scrivere in italiano :) ).

          • Bé, quando intendi partire, se ti va, contattaci: hai uno stile che si sposa perfettamente con quello del Laboratorio InfoProdotti! ;)
            E a parte questo, ho apprezzato molto tutto: articolo e impostazione del blog… complimenti ancora! :)

          • Grazie Josè! Lo terrò a mente ;)

  11. Great post. I am the sale manager of my company which produce the abacus (soroban). I have been thinking about the price of our product. It seems like the price is rather high at this moment, so the number of our products sold out is not very high. I will talk with my peers about this.

  12. Simon says:

    Inspiring, thanks for the insight! For some situations I had a similar guess intuitively.

    The market share numbers are catchy, but what is about the absolute numbers – did the total amount of sales change at higher prices, or was is pretty constant?
    regards
    Simon

    • Hi Simon, I’m glad to hear that you liked this.
      To which case study are you referring?

      Anyway keep in mind that not always lower prices mean more sales. Most of the price/sales graphs have a maximum, which means that in certain ranges you can increase product price AND get more sales.

  13. Olly says:

    Thanks for the article – I’m new to pricing strategies for a new subscription-based education course website that I’m building. At the moment I have a ‘free’ registration option that gives the user a ‘taster’ of the course, but they then need to pay for access to the whole course. I’d be grateful for any ideas on this – should there be a ‘free’ limited access option? Maybe I should create further subscription levels as your article suggests. Interesting psychology!

  14. Silas Reed, Writer for 100KCrossing, writes articles that inform and teach
    about different 100K job profiles. However, there are various kinds of salmon and hardly
    any of them are more strong and bouncy than others. Investigation everything concerning your angling journey
    upfront.

  15. Great post.

  16. What i don’t understood is in fact how you’re now not actually a lot more well-favored
    than you might be now. You are very intelligent. You recognize therefore considerably in relation
    to this subject, made me personally consider it from
    numerous numerous angles. Its like men and women
    aren’t interested until it’s something to accomplish with Lady gaga!

    Your individual stuffs nice. At all times handle it up!

  17. This is really a life saver infographics for me. Right now struggling to find out a perfect price for money making wallpaper wordpress theme, Now i am little bit more comfortable. Thanks a lot for sharing this infographics with us.

  18. Ibcbet says:

    This is my first time visit at here and i am actually pleassant to read everthing
    at alone place.

  19. Useful information. Fortunate me I found your site
    accidentally, and I am surprised why this coincidence didn’t happened in advance!

    I bookmarked it.

  20. Josef says:

    Heya i’m for the first time here. I came across this board and I find It really useful & it helped me out much.
    I hope to give something back and aid others like
    you helped me.

  21. Its such as you learn my thoughts! You seem
    to understand so much approximately this, like you wrote the book in it or something.
    I believe that you just can do with some p.c.
    to force the message home a bit, however instead of that, that is wonderful blog.
    A fantastic read. I will definitely be back.

  22. I constantly spent my half an hour to read this blog’s articles daily along with a cup of coffee.

  23. I’m gone to tell my little brother, that he should also pay a visit this website
    on regular basis to get updated from newest information.

  24. click says:

    Hello there, You’ve done a fantastic job. I’ll certainly digg it and personally suggest to my friends.
    I am confident they will be benefited from this website.

Trackbacks

  1. BizSugar.com says:

    The Science of Pricing: Pricing Strategies to Increase Your Sales [Infographic]…

    What’s the best price for your products? Choosing the right price for your product can make you get a headache. Pick a low price and you’ll earn too little from your sales, pick a high price and you’ll sell only a few products. Well, to tell the truth,…

  2. [...] have found an incredible Infographic on Blog-Growth about the science of pricing. Here are a lot of great case studies that give you great insight on [...]

  3. [...] came across an excellent Infographic the other day, courtesy of Blog Growth  that puts this behavioral science research into practice to come up with ideas that will make [...]

  4. [...] Una infografía sobre la psicología de los precios. Vía Blog Growth [...]

  5. [...] la siguiente infografía, elaborada por Blog Growth, tenemos 7 técnicas de neuromarketing aplicadas a los precios. Cada una de estas técnicas pueden [...]

  6. [...] The Science of Pricing: Pricing Strategies to Increase Your Sales [Infographic] [...]

  7. [...] To read the whole post, check out Blog Growth. [...]

  8. [...] To read the whole post, check out Blog Growth. [...]

  9. [...] En Blog Growth han publicado una serie de estrategias de precio que pueden aumentar significativamente las ventas de un negocio. A continuación te comparto esta serie de estrategias y te invito a que las pongas en práctica en tu negocio. [...]

  10. [...] The Science of Pricing: Pricing Strategies to Increase your Sales [Infographic] (Blog Growth) [...]

  11. [...] this infographic on your blog, be sure to reference Mauro’s infographic and blog post at:  http://www.blog-growth.com/the-science-of-pricing/. Want to find out more about getting more blog traffic?  You can follow Mauro’s blog at [...]

  12. [...] little infographic from Blog-Growth.com on the science of [...]

  13. [...] it wasn’t until Mauro D’Andrea published his guest post How to Milk SlideShare Homepage for All the Traffic You Can [...]

  14. [...] experts (if you want to take a more detailed look at the experiment, you can read about it in my infographic about pricing strategies). Ultimately, this example shows that products with higher prices are associated with a higher [...]

  15. [...] Blog Growth han publicado una serie de estrategias de precio que pueden aumentar significativamente las ventas [...]

  16. [...] The Science of Pricing: Pricing Strategies to Increase Your Sales [Infographic] 39 [...]

  17. [...] pricing strategies depends on your ideal customers. If you want to sell to people with a high income, you’ll [...]

  18. [...] The Science of Pricing: 7 of the Best Product Pricing Strategies [Infographic] [...]

  19. […] that you have to use images. Another good idea is to make posts using images. Or you can publish infographics – either yours or someone else’s […]

  20. […] study, discussed here, found that a sale price is more palatable when it is written in a smaller typeface. A price that […]

  21. […] uuring (leitav siit), leidis, et müügihind on parem kui see on kirjutatud väiksemas kirjas. Hind mis on […]

  22. […] study, discussed here, found that a sale price is more palatable when it is written in a smaller typeface. A price that […]

  23. […] Blog Growth colocaram uma série de estratégias de preços que podem aumentar significativamente as vendas de […]

  24. […] For more details about what you see in the infographic, read the original post. […]

  25. […] For more details about what you see in the infographic, read the original post. […]

  26. […] favourite infographics produced by the Socially Sorted team in 2013 for Mauro D’Andrea from Blog Growth – this post breaks it down and talks about what is great about it and what it works. And the […]

  27. […] From The Science of Pricing: 7 of the Best Product Pricing Strategies (Infographic): […]

  28. […] finalitzar, adjunto aquesta infografia sobre el tema dels preus, extreta de blog-growth.com, amb resultats d’estudis bastant […]

  29. […] Nguồn: blog-growth.com​ […]

  30. […] blog-growth.com​ « Tháo dỡ tàu biển, một trong những công việc nguy hiểm nhất thế […]

  31. […] [8] The Science of Pricing: 7 of the Best Product Pricing Strategies [Infographic]  , link […]

  32. […] Land van herkomst USA | Infographic designer Blog Growth | Opdrachtgever Blog Growth | Bron noahrickun | Pixels 1200 x 10356 | Permalink http://www.coolinfographics.nl/?p=16100 | Terug naar […]

  33. […] [8] The Science of Pricing: 7 of the Best Product Pricing Strategies [Infographic]  , link […]

Speak Your Mind

*

625 Flares Twitter 174 Facebook 341 Google+ 110 625 Flares ×