So, you’ve used all of your psychological price promotion knowledge to set the perfect price for your product – surely that’s all you can do to get those pounds rolling in? Actually, how you display these prices can also influence your customer’s price perceptions. Here’s a few simple tips and tricks you can use to make your prices look even more alluring.
A great way to alter price perceptions is to separate the total cost into smaller, less expensive chunks – also known as partitioned pricing. For example, not including postage fees or VAT charges when displaying a price will of course make the product appear less expensive and better value when compared to other products. A prime example of partitioned pricing is eBay auctions. According to Hossain and Morgan (2006), CD’s with a lower starting bid (e.g. £0.01) and high postage charge were perceived by consumers as cheaper than CD’s with a higher starting bid and free delivery, despite the latter having a smaller total cost.
Allowing customers to buy products in instalments is another great way of altering price perceptions. By splitting the total cost of a product into smaller, more affordable chunks, the cost of the product appears smaller and less expensive in comparisons to competitor lump sum prices.
Priming customers with the idea of ‘smallness’ has also been found to make a product appear less expensive. Indeed, research has found that positioning the price on the bottom left of a ticket label triggers concepts such as ‘down’, ‘reduced’ and ‘low’, thus subconsciously priming customers to perceive the product as being less expensive (Coulter, 2002).
When it comes to the font of your price label – bigger is not always better! Prices are perceived as lower when they are displayed in smaller sized text. This effect is strengthened further when this is positioned next to a more expensive comparison price displayed in a bigger font size. (Coulter, 2005).
Another great way to use this technique is to make the end of a price smaller than the beginning. Consider the price £2.99 – according to this strategy, using a smaller font the ‘99’ will make the ‘£2’ stand out more and make the product appear less expensive.
Any additional language that surrounds the price can also influence price perceptions. Research has revealed that phrases such as ‘low maintenance’ lead to more positive feelings towards the price compared to phrases such as ‘high performance’, despite both of these features being rated as equally important. This is due to the connotations associated with the word low, which make customers perceive the price as lower and less expensive (Coulter and Coulter 2005).