When it comes to pricing in the marketing mix, there are a variety of different tactics that you can use to your advantage. While it's important for you to establish prices that reflect the value of your product and are within reach for your prospective customers, you should also consider how you can use and adjust pricing to make your products more appealing. Here are some questions you should ask yourself when you're developing your marketing strategy:
How Can You Use Pricing to Encourage Buyers to Commit?
When you offer a variety of different services and packages, it's important to think about how you will distinguish them. You might be tempted to give two comparable options the exact same price, allowing customers to choose what's right for them, but this strategy can actually make it harder for people to commit. In fact, when two options are too similar, customers might have a difficult time making a decision. Researchers from Yale University conducted an experiment in which they gave users the choice between two packs of gum in various price combinations. They found that people who were given a choice between two packs of gum priced at 63 cents were much less likely to make a purchase than those who had to choose between a pack of gum priced at 62 cents and one priced at 64 cents.
How Can You Use Presentation to Your Advantage?
Sometimes the way you present a particular price can make a major difference. For example, research has indicated that ending a price with the number nine can have a strong impact on buyer psychology. A team of researchers at MIT and the University of Chicago found that customers bought more units of a particular women's clothing item when it was sold for $39 than they did when it was sold for $34, even though the latter is obviously cheaper.
How Can You Use Pricing to Establish Value?
Customers need to feel that the benefits they get from a particular purchase will outweigh the hit to their wallet. As a marketer, you can reframe prices to make a purchase feel like less of a substantial financial commitment. For example, even though $12/month amounts to the same price as $144/year, many customers will perceive the yearly cost to be higher than what the monthly increments actually total, making them less likely to complete a transaction.
When you're considering how to take advantage of pricing in the marketing mix, it's important for you to remember that your business is unique. Your prices must reflect your company's operating costs, as well as your value proposition. Be sure to think about what model works best for you and your bottom line.
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