This keep it simple sweetheart strategy can help you improve sales of your products or services. You can implement this strategy only after you have set the price that your customers are prepared to pay.
You can’t determine price before you take the following basic steps:
- Develop your marketing strategy
- Make marketing mix decisions
- Estimate the demand for your product or service
- Calculate the cost associated with the product or service
- Evaluate environmental factors
- Set pricing objectives.
It’s all about perception
This morning I decided to cook rice for my family. As I looked in the rice jar I realised that the rice was finished.
I just needed two cups of rice, so I send my son to the shop to buy two kilogrammes of rice. I gave him R100. When he came back he gave me a handful of loose change.
I asked, “Why such a small amount of change?” He replied, “That’s all the change they gave me,” and handed me the till slip as proof.
I counted the change and realised that it amounted to more than R70. The reason I had thought it was too little change for my R100 was because it was in R5 coins. Had the change come in the form of R50 and R20 notes, I would have immediately seen that it was the correct amount.
We all experience this at some stage. You check your wallet and find loose change and think you don’t have much money. However, this is all too often just a perception.
The same principle applies in pricing. If you want your customers to buy from you, you need to present your price in a way that makes it appear lower.
Making your price seem low
According to a research paper published by the Journal of Consumer Psychology, researchers found that prices containing more syllables when vocalised seemed much higher to customers.
In the paper they demonstrate that including commas and cents in a price can change how the price is programmed in the customers’ memory.
In fact, there is a positive relationship between the number of syllables in a price and its numerical size.
This can be easily understood with a demonstration:
- R1 299
The first two numbers are perceived by the customer as higher than the third. The way a customer verbalise these numbers affects numerical size. The first number will verbalised as one thousand two hundred and ninety nine and third number will be verbalised as twelve ninety nine.
This verbalisation will unconsciously cause the customer to think R1,299 is higher than R1 299. The verbal subconscious programming of a written price can influence assessments of the numerical size of the price.
The Journal of Consumer Psychology concludes that these effects occur because consumers non-consciously perceive that there is a positive relationship between syllabic length and numerical magnitude.
Simple equals sales
When a price is presented in a longer version with commas and cents it is seen as a higher price. So when you present your price to your customers remember to keep it simple sweetheart. When presenting a price to your customers avoid commas and cents unless it is necessary.
If you want improve the chance of a sale adopt the simplest way to present the price to the customer. As you add any commas and cents it appears higher to your customer when he or she verbalises it.
R49 will sell more of your products or services than R48.60 will, even though the latter is lower.