If you’re selling most of your products or services at a single price point, then you’re missing out on a huge opportunity to make more money.
Take a look at just about any company, and you’ll see they offer consumers a variety of price points and options.
For example, go to Dell.com, choose one type of computer(such as an Inspiron), and notice how you’ll get at least three different main options, all of which have different price points.(Naturally, you’ll also have the opportunity to upgrade your options as you walk through the sales process, no matter what main option you selected.)
Now you can do the same thing and offer a variety of price points for your products and service. Now here’s the key: if you do it the right way you’ll actually be able to lead your prospects to choosing a specific price point.
That’s pretty awesome, right? All you have to do is take these three points into consideration as you develop your pricing strategy:
- Optimize Price Points.
- Offer Premium Options.
Let’s take a closer look at each of these three factors and how the psychology plays out in your prospects’ heads.
1. Optimise Price Points
The idea here is to set up a battle between your prospect’s logic and their emotions and desires.
Let’s imagine for a moment that you’re selling a self-hosted autoresponder script. You might offer your prospects a variety of price points with options as follows:
- The lowest price point is for those who expect to have 15,000 or fewer subscribers.
- The middle price point is for those who expect to have between 15,001 and 74,999 subscribers.
- The highest price point is for those who expect to have more than 75,000 subscribers.
You can set it up so that customers know it’s cheaper to pick the right option now, as opposed to upgrading later.
So what happens?
The savvy shopper will spend time considering these options carefully, since picking the right one today will save them money in the future.
Logic will tell the beginning marketer he should pick the low or mid-range option, since it’s unlikely that he’ll get more than 75,000 subscribers very quickly. Logic says don’t worry about any extra money spent upgrading later, because he’ll be making a lot more money once he has a big list.
But then his ego steps in. His ego tells him his business is going to grow quickly. His ego says getting 15,000 subscribers is a cakewalk, and growing the list to 75,000 subscribers is likely since he has a plan. So he’ll pick the high-priced option because he’s convinced he’ll need it very soon.
(Spoiler Alert: The average beginning marketer probably won’t break 25,000 subscribers, so the mid-priced option would have been just fine.)
You can do the same thing with your offers: simply pit your prospect’s hopes and desires against logic. Chances are, their hopes and desires will win just about every time, and you’ll pocket a little extra cash.
Now let’s have a look at the next factor you can use to increase the value of your average sale…
The idea here is to offer at least two price points, with the second price point being the obvious choice because the customer gets a whole lot more value for their dollar. The trick is to make the higher price point just slightly higher, but the value is considerably more.
The cool thing about this psychological trick is that you can actually lead your prospect to the option you want them to choose. If you have two price points, you can lead them to the highest price point. If you have three price points, you can lead them to choose either the middle or highest price point.
Let me give you an example…
Let’s suppose you have two bundles of products available for sale:
- Bundle #1 has two eBooks available for $20.
- Bundle #2 has the same two eBooks, plus a bonus video, PLUS an in-demand software app for $27.
Now which bundle will most customers choose?
That’s right, they’ll choose the second bundle because they get a whole lot more value for just $7 more. You make one “no brainer” option, and you can bet customers will flock to that option like crazy.
Now let’s look at the last psychological trigger.
3. Offer Premium Options
Some people just want the best of everything.
Offer them two wines – one for cheap and one expensive – and they’ll choose the expensive wine.
Give them the option of a standard hotel room or an upgraded suite, and they’ll choose the suite every time.
No matter what they’re buying – from steaks to computers to cars – they’ll choose the most elegant and most expensive option.
Now here’s the clincher…
It isn’t that the higher perceived value justifies the price in their mind. In many cases, it’s the other way around. Namely, a high price creates a higher perceived value.
Researchers have shown this to be true. Give people a blind taste test of wine, and tell them one bottle is significantly more expensive than the other. They’ll choose the higher priced wine as being a finer wine, even if you just gave them the exact same wine for the taste test, or if you told them a cheap $10 bottle of wine was the $50 wine!
Likewise, marketers encounter the same thing when they test prices. Sometimes, without changing the offer or the product at all, simply boosting the price can boost sales. A high price means a higher perceived value, and thus more sales.
Now you too can tap into this desire by creating a multi-tier pricing strategy that showcases the most expensive option as being elegant, premium and exclusive.
For example, you might set up a membership site with three levels and price points. Then you name these options as Bronze, Silver and Gold. Those who value premium options will go for the Gold option because it’s the best.
Here are other words you can attach to your highest-price option:
- Inner Circle
Put a price point to match these premium options, and you may just get a surprising number of sales.
Now let’s wrap things up.
Single price points are useful at times and should be part of your overall marketing strategy. But a multi-tier pricing strategy actually introduces psychological factors that lead your prospects directly to the price point you want them to choose.
Here are the three main factors:
- Optimize Price Points. This is where you pit your prospects’ desires and emotions against logic. (Emotion usually wins.)
- Over-Deliver. Here’s where you create one “no brainer” price point that offers a whole lot more value for very little extra expense. Most people will choose this option.
- Offer Premium Options. Here’s where you use a high price point to create high perceived value, which can spur sales.
You can use each of these strategies separately in order to boost your conversion rate and/or guide your prospects to a specific option. In some cases, you can even combine these strategies, such as by pitting emotion against logic AND creating a premium option.
You don’t need to take my word for it that these pricing strategies work. All you have to do is start testing these options immediately. I think you’ll be surprised by the results!