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...
Read MoreThe Price Is Right
Picking the right price point for your products and services is critical for your success, but it’s a challenge that is often easier said than done. Other than trial and error, how can you know when the price is right? Most popular financial gurus say that the ideal price for products and services is one that covers costs, maximises profit, and is at a rate that is still attractive to clients and prospects. While this is good advice to follow when you are first developing your pricing strategy, it doesn’t take into account intangibles, such as consumer behavior. Consumer behaviour is often motivated by emotions and feelings as well as logical step-by-step analysis. In general, shoppers tend to make a purchase when they feel that they are buying something of value or getting a bargain for their money. Regardless of the motivation behind the purchase, many consumers rely on an inner sense of what they feel things should cost when they are shopping. They then make the decision to purchase based on whether or not the price feels right to them. Understanding your target customer’s feelings about when a price is right is the key to setting the perfect...
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