6 Ways to Find Out if Your Prices Are Right

analytics, Brand and Consumer Insights, Other

March 27, 2018 by

You’ve probably walked away from purchases for a variety of reasons. Maybe you didn’t trust the salesperson. Maybe the product wasn’t for you in the end. Let’s be honest though: in many cases potential buyers walk away because they think the price is just too high.

If you have customers exiting the sales funnel early, pricing may be one of the problematic factors.

In that case, charging less may seem like an obvious solution. Unfortunately, things are usually more complicated than that. First, how do you recognize that price is an issue? Second, you must understand why customers perceive your prices the way they do. Finally, you’ve got to figure out how to set prices that are attractive as possible. All of these are part of a successful pricing strategy. These six action steps will help you accomplish these goals.

Identifying the Problem

Before you can take any action when it comes to your prices, you have to recognize that there’s a problem. More importantly, you have to figure out why customers are getting turned off.

1. Collect Feedback From Customers Who Drop Out of The Funnel

Customers drop out at many points in the funnel. They also take their leave in many ways. Some may cancel a scheduled meeting with a sales rep. Others may leave an abandoned shopping cart. Whatever happens, you’d better know why. Start by using analytics to collect information about your visitors.

For those who drop out while on your website, you can simply create a poll that triggers when they bounce. There are just a few tips to keep in mind:

  • Make it short and simple. An excited customer may be frustrated or upset. Don’t expect them to answer loads of questions.
  • Don’t assume pricing is the issue. Ask about customer service and other things as well.
  • Include a box for customers to leave feedback if they want to expand on any of their answers.

For other customers, you may need to reach out to them via phone or email. This has two benefits. You may be able to get them back into the funnel. You can also, again, identify if pricing is the problem.

2. Read Customer Reviews

If people are buying your products online, chances are they’re posting reviews as well. If you aren’t reading them you should be, especially the negative ones. This is a great way to identify why customers are unhappy. If it’s pricing that’s an issue, reviews will contain a lot of information you need. For example, are customers unhappy with the quantity they receive? Are there complaints about quality in relationship to price? Maybe customers find your pricing system to be too confusing.

3. Get Insights From Sales Staff And Customer Service Reps

Other than customers themselves, there’s no better source of information than the people who are in front of your customers each day. These are the folks who understand the general sentiment your customers have about your products and services. They’ll know if a large number of customers are unhappy with your pricing on any particular item.

Ideas For Creating a Successful Pricing Strategy

People like a bargain. In spite of this, cutting your prices may not be the answer to your problems. Instead, you’ll have to dig a bit deeper to find out what is best for you.

1. Assess Your Competition

Again, this isn’t about pricing lower or higher than your competitors, although that is one factor to consider. Check out your competitors’ landing pages and websites to find the following information:

  • Are they offering add-ons such as warranties or future discounts? These can sell customers who may initially feel price points are a bit high.
  • Do customers have options such as tiered or subscription pricing? Prices can be more attractive when customers can select payment options that work for them.
  • How are they displaying and describing their products? Better angles and higher quality images can show customers that products are high quality and reliable. Well-written descriptions give customers confidence in what they will be purchasing.
  • What about trust? Are your competitors showing testimonials or trust badges. What about data? For example, a freelance writing service can post a visual indicating they are on the top writers list.
  • Are they posting product demonstration videos or tutorials? Customer education is a key part of ensuring that your prices seem worthwhile.

2. Determine Whether to Focus on Value or Prestige Pricing

Are you selling engagement rings and French chocolates, or are you selling home goods and discount clothing? Basically, it’s important to determine how you want to present your prices, and how your customers will likely feel about them.

For prestigious and luxury items, bumping prices a bit higher can actually work better than lowering them.  Brands like Nike and Samsung have more success at higher price points than lower. There’s truth to the idea that higher prices can correlate to higher perception of value. With some products, like engagement rings and French chocolates, people want to feel as if they are treating themselves or someone else. In addition to bumping prices a bit, prestige pricing involves other techniques. One is rounding prices up to the  nearest dollar. Simple, even numbers tend to work best with pricier, luxury items.

Then there are times when customers want to know they are getting a great value. A value based pricing strategy can help you accomplish that. You can find one example of this at your nearest gas station. There’s a reason that the price of gasoline always ends in a nine. It’s a psychological pricing trick that makes 2.99 per gallon seem less drastic than 3.00 per gallon.

3. Experiment With Small Details

When a customer reaches your  landing pages, certain things are going to stand out for them. Pictures and videos of your project is one. Your CTA button is another. Then, there’s the price of your product. Chances are you experimented and conducted A/B testing when you were perfecting your CTA button. You also worked to ensure that your images and videos are eye catching and high quality.  Have you put the same work into the way your price is displayed?

Experiment with the color you use to display your price. If you use a comma, try taking it out. Play around with the positioning of your price in relation to your product. For example, if it’s to the right, try placing it to the left. You can use a tool like Google Analytics to measure the affect any of these changes make.

Conclusion: A Successful Pricing Strategy Needs Ongoing Attention

There’s no reason for pricing to be a sticking point for your business. Try the strategies above to determine whether or not customers have issues with your prices, and to make small changes to fix those perceptions.

Afterwards, continue to watch the response of visitors to see whether things improve. Keeping your price structure up to date is an ongoing process, and periodic check-ups will prevent the need for large overhauls.

Making your online business or e-commerce store stand out in the crowd can be hard. But with the proper tools and training, reaching the top is completely possible. Learn how with our classes on marketing analytics, and measuring success.

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Luisa Brenton is a former brand developer, currently working as an educational blogger.

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