Right from minor tweaks in design for improving conversion to web form validation and improved registration for reducing shopping cart abandonment, I’ve had the occasion to use different techniques for increasing conversion rates for web stores.
Just a couple of weeks ago, one of my clients shocked me by boosting his sales simply by messing about with pricing. We had been running a rather traditional social media campaign – mostly ads served to users in the right location – and were getting a good response.
Jack felt that fluctuating prices and deploying low-price options that lasted just for a few hours might produce good results. And boy, that did work! We saw 400% increase in sales within a week by deploying this simple pricing strategy.
As you can imagine, I researched the hell out of the subject and found out how different pricing strategies can work (and why they work). Here are some of the eCommerce pricing strategies that seem to give instant boost to sales. I hope you will play around with these and discover the one that works best for your products or services.
Let the Users Pick a Price
People are usually honest and pay well when given freedom.
Just half a kilometer from where I work, there’s an innovative restaurant run by social workers. The cook, the waiter and most of the staff is made of volunteers. Every day different people volunteer for the jobs. You are not given a bill once you are done eating – you simply pay what you feel like. Although the food is just about okay, most people pay more than they would in a glitzy restaurant.
What this got to do with eCommerce stores? Not much if you are selling conventional products, perhaps. But for stores selling a service or artists selling music, digital art, stock photos or similar commodities, the pay-what-you-want model of pricing can work like a charm.
For every person who tries out your product and doesn’t pay, there will be a loyal user who’d pay enough for three people – as long as the product or services is excellent. Plus, many visitors who might not be ready to pay for your product or services may take a liking to it after using it, and these people can turn into lifelong customers.
As I am bursting with stories today, please let me explain this point with another example.
Have you seen Richard Linkwater’s cult classic Before Sunrise? The main characters, sinking deep in love fast, are walking near a river. A haggard-looking poet with disheveled appearance approaches them and offers to write a poem for them. He writes one. His verse is not really a piece of art, but it centers on their experience. So, they are touched. And, they pay through their nose – happily, gratefully.
Purely commercial moral from the story: people pay for emotional connect & perceived value. The value of your product is as high as the user is willing to pay. So, in certain cases, pay-as-much-as-you want can work like a charm.
Folks, The 9 Thing Does Work
Human mind seems to view numbers through a haze.
Don’t you hate it when you see products that cost $1.99 or $39.99? Frankly, they annoy me. But, as human beings, we are hardwired to comprehend numbers in a certain way. You may tell yourself that 49.99 means 50.00. But, your mind will instinctively place the price in the 40s and not 50s. So, there is a reason why the number 9 dominates pricing.
However, most people are aware of the pricing strategy. Research suggests that the use of '9' pricing works best when the users do not have any real idea of how much a specific product or service should cost. In case you are selling a product with a known price, this strategy may not be that effective.
But, you can still use the power of '9' by listing the known, average price and then offering a discounted price. So, if the product actually costs between $45-55, you can list the main price as $51 and state that you are offering it for $49.9.
Offer Discounted Bundle Products
Sweeten the Deal and Sell More with a Heavy Discount on Bundles.
Bundling similar products together is a decade-old strategy. If someone is buying a laptop, there is a good chance that you can persuade them to buy a laptop bag and other accessories. If you can bundle the right products together, you are making things easier for the user. Instead of making several small purchases, the user can get all the related products in a bundle.
Most of the times, users tend to research one central product. After browsing around, they make the decision of buying that product. Buying related products is a combination logical decision-making process and impulsive buying at the same time – "I am sure I will need the laptop bag and the headphones for Skyping. I better buy it. But, I wonder, should I buy it now, or leave it for later?"
In order to tip the balance in your favor, it is best to offer a heavy discount on the bundled products, or create an impression that there is lot to be gained by buying them all together. By clearly showing the maximum price of the products, showing the total discount amount and the final amount, you can sway the tentative customer to buy the bundle.
The conversion success ratio can be increased by allowing the user to select from a bunch of related products for the bundle, instead of making it mandatory for her to buy all the ones chosen by you.
Offer Tall Discounts for a Short Time
Timed discounts convince impulsive buyers to grab a sweet deal.
Certain products and services have really high markups. While it may not make economic sense for you to sell such products at heavily discounted prices daily, there are times when selling in bulk can be profitable. Timed discounts on selected products for a day, or for a few hours, can convince buyers to buy instantly.
One of my clients sells innovative t-shirts with interesting designs and slogans. A t-shirt is made for every occasion – Batman release, Halloween, Christmas, you name it. Last Halloween, just a week before the celebrations, he offered 50% discount on Halloween-theme t-shirts and combined it with a social media marketing blitzkrieg. Needless to say, the sales shot up, and the same strategy has been working wonders for him this Christmas season. If you can combine timed and smart pricing with social media optimization, the results can be pleasantly surprising.
At the end of the day, you need to conduct regular A/B testing for different pricing strategies. Sure, you may get lucky and the first pricing strategy that you try will work wonders. Usually, trying out different approaches and testing will help you come up with a pricing strategy that provides optimum value.
As online marketers or online store owners, many of us (at least I do!) tend to focus too hard on the design, SEO, SMO and other digital marketing aspects. However, there is lot to be learned from age-old traditional marketing strategies. By focusing on traditional marketing ideas and transplanting them to the online world, marketers and store owners can drive sales increase profits.
What’s your take on this? Please share your ideas, insights and experiences in the comments.