People in the United States make a lot of impulse buys. It has been averaged that between six and ten purchases in brick and mortar stores are classified and impulse buys. People also tend to not spend a lot of time deciding on what they will buy. It has been estimated that a person will spend somewhere between three and seven seconds deciding what brand they will buy. One way to help your products get sold quicker and more often is not just to get the right holders for price tags or work out the best, custom retail displays, and free standing signs but you have to put the right price on the items you want to sell.
The question is more challenging than you may think. There is a lot of psychology at work here. Kissmetrics has put together some tips for how to set the right price point for your items to get them to sell.
- Go with rounded figures. Often people think that the best thing to do is to sell something for $4.99 rather than $5.00. More and more customers are onto that industry trick and it does not work the way it used to work. People like to buy things that have more rounded numbers so something that costs $5.00 is more likely to sell than something priced differently. Research suggests that at last 57% of shoppers are more likely to go for the item with the whole dollar price. The reason for this is simple. People find it easier to deal with rounded numbers. An article in the Journal of Economic Psychology reported that people have a natural preference for round numbers.
- Think about the power of the anchor effect. When a person is influenced by the very first piece of data they get, it is called the “anchoring effect.” People like to have a reference point when they are making decisions of what to buy. This may have nothing to do with the holders for price tags but there are real work implications of this phenomena. For instance, a person in the west will read a web page from left to right. If you place your most expensive items on the left side, they will be viewed first and that can impact what they buy. When people see a more expensive item before they see a lower price item, when they see the lower price, they will think they are getting it at a reduced price, when they may not be.
- When someone says “this price is too high,” they are worried about something else. Experts recommend making the product more valuable but leaving the price alone. Economists list two reasons people complain about a price. The first is that they cannot afford the item. There is nothing you can do about that. The second reason is the consumer does not think the item is worth the amount you are charging. Kissmetrics uses the example of a Ferrari. Sure it is pricey but it is worth the cost.
- Set your price higher than you think you should. There is a saying that a lot of people believe in. It is, “you get what you pay for.” Some research was done on the price of wine and how good it tasted. People were given the same wine but different price tags were put on it. Based only on the price tag on the wine, people said the more expensive the vino, the better the flavor.
- Take off the $. Adding dollar signs to your price list or the holders for price tags can make it harder to sell those items. People who want to buy something can be turned off by something as simple as the dollar sign before the price. If you need evidence of this, go to any fine dining establishment. Many have the prices, of course, but they are not preceded by the dollar sign. Research at Cornell University showed that how a price is listed on an item or list can influence how much a person spends. If you cannot remove it altogether, you can make it smaller and harder to read and see under the holders for price tags.