How Consumers Think About Pricing
They are a funny thing, numbers. Often thought to be unemotional, when attached to a dollar sign, the opposite is closer to the truth. When it comes to pricing goods and services, market experts have a lot to say about how numbers connect to consumers’ feelings, and how they think about pricing as a result.
A study by researchers in the US found that consumers are more drawn to rounded numbers ($100 even) when making ‘fun’ purchases, for gifts, holidays or recreational purposes, but were more drawn to odd numbers (say, $97.56) if the purchase was for a functional, professional or serious purpose. For example, someone picking up a bottle of wine to take to a friend’s place might choose the $30 one, thinking $30 exactly must be some kind of sale. Someone catering a business lunch might be more inclined to buy the $32.75 bottle, figuring that to be a ‘proper’ price.
Deals on many items, or deals available all the time, like in a discount store setting, are seen as less valuable to consumers than less frequent sales such as those specialty stores conduct. It is also important to note that comparisons to the competition in your advertising might get consumers to look more closely at your business, but they only feel they are getting a real deal if they get your goods or services at a price lower than your usual one.
Setting prices too high will put you out of reach to consumers, but too low will put you out of business. Pricing is a balancing of emotions, and the books.
When it comes to determining your prices, try to think like a consumer would. Find out, perhaps through a survey, which aspects of your product or service they will be most interested in, and how much they would pay for those particulars. If you can offer the most important attractors at a competitive price, you are likely to increase market share, and revenue.