Pricing is one of the most complicated parts of running a business. Items and services don’t have clear intrinsic value; they’re worth whatever people will pay for them. And what people will pay isn’t based on some logical set of standards. When faced with making a decision in the moment, what seems like a good or reasonable deal can be influenced by any number of varied factors.
That means there’s a decent chance you could be making more money if you tried a different pricing structure or tested out different price amounts for your product.
eCommerce price testing gives you the chance to see if a slight change in how your pricing works could make a big difference in how much money you bring in. But it pays to be careful and strategic in how you do it. Our guide will talk you through some of the best strategies to try and how to go about testing them out.
Different Pricing Strategies to Try
To start, you should pay attention to what research has to tell us about how people make purchasing decisions. Turns out, it’s almost never as simple as the lowest price wins. There are interesting psychological quirks that influence how people view pricing on a level they’re completely unaware of.
Consider which of these eight pricing strategies that are backed by science are worth trying for your eCommerce business.
1. Try bundling.
Every sale is an achievement, but getting multiple sales in one fell swoop is an even more profitable one. Bundling works by making it easier for customers to make a decision to buy more at once without feeling like they’re doing so. Instead of making five distinct purchasing decisions for related items or extras that they want, they can make a decision once to purchase a package that does it all.
The result is the same in terms of what they get and what you make (or it’s at least comparable, bundling should often mean they get a better deal out of buying things together than if they bought them separate), but it feels like they’re getting more for what they’ve spent and they only have to make one decision instead of several, which makes them more likely to convert.
Server Density, a website monitoring service, switched from a mix and match pricing model that gave customers the option to pick which of their services they wanted and the number of websites they wanted them for to providing three bundled options. While they saw a slight decrease in conversions for the latter model, the price per purchase was so much higher that they more than doubled their revenue.
2. Round down (or up) to 9.
We don’t entirely understand why the power of nine works, but it does. Prices that end in nine consistently do better in testing than lower prices that end in any other number. If you have something on your website that costs $50 now, try making it $49.99 (or even $59).
In one test that looked at how the same items of women’s clothing sold at $35 versus $39, people went for the higher price 24% of the time. And further tests have borne out the power of nine again and again. There’s something about the number nine that drives people to buy and if you’re not taking advantage of that information, you could be missing out on more profit.
3. Offer multiple options.
This tip comes with a caveat. The research doesn’t just suggest offering multiple options so much as doing so strategically. In a famous example (in conversion specialist circles anyways), The Economist tried out two different pricing structures:
- An online only subscription for $59 and a print + online subscription for $125
- The same online only and print + online subscriptions at the same prices, plus a print only subscription option for $125.
Your first thought is probably, why? Who on earth would go for the print only subscription when they can get print and online for the same price? As you’d expect, no one actually chose the print only option in tests, but offering the third option managed to increase sales of the more expensive subscription package that combined print and online. By adding a third option that looked less valuable, it made the more expensive choice look more valuable than the cheaper option by comparison.
Something similar is at play in tests for how different beers sell. When people are offered a choice between expensive premium beer and cheap beer, they often choose the premium. When you add a third option to the mix though, people’s choices change based on how the beer is positioned.
If you have a super cheap beer, a cheap beer, and a premium beer, most people go for the middle option. If you have a cheap beer, a premium beer, and a super premium beer, most people still go for the middle option – which ends up making the bar more money. The lesson here is clear, but complicated: having a comparison in front of them influences what people choose, but it pays to play around with how those comparisons work to see which pairing of options will make you the most money.
4. Reduce syllables and length.
At a glance, does $1,500 or 1500 look higher to you? If you take more than a split second to think about it, they’re obviously the same. But research has found that removing extra characters and syllables in how prices are written works to make amounts seem like less to us, which in turn increases conversions.
A simple change to the formatting of your prices could make a difference in how your customers perceive them and whether or not they buy. It’s certainly something worth testing.
5. Use anchoring.
As some of the examples shared here have already made clear, a lot of our perceptions of price have to do with comparisons we see. You don’t have total control over the comparisons a prospect can make against other websites, but you can control what they see on your own site. If you put two similar products next to each other on your site with very different pricing, people are more likely to see the one with the lower price as reasonable due to the comparison.
This is also backed up by research. A study found that when even real estate professionals were presented with wildly inflated prices for the homes in a neighborhood and asked to name a reasonable price for a sample home nearby, they went much higher than the house was actually worth. You can use the same anchoring principle to potentially raise the perceived value of your own products.
6. Try reframing your pricing.
Sometimes the same price expressed a different way can make a big impact.
If you sell a subscription product, saying it costs $5 a month could well increase sales versus saying $60 a year. Even though people can do the math to figure out the two amounts are equal, one looks like less at a glance.
Even if you don’t have a subscription product, you could try building shipping costs into your product pricing and offering “free” shipping. Even if the cost comes out to the same amount, it can seem to customers like they’re getting a better deal.
Consider different possible ways to frame the pricing you offer now. The only way to know if people will respond differently to a new way of looking at your pricing is to test it out.
7. Change your font
This is by far the simplest suggestion on the list, but one that researchers have found evidence for. Customers perceive prices as being a better value when the font size is small as compared to when it’s large and bold. Something as simple as testing out a different font size and type could pay off in more sales.
8. Simply try a higher price.
While all of these psychological tricks could pay off, so could simply bumping up your prices by a little bit. The only way to find out if people are willing to spend more is to charge more and see if your sales drop or stay steady. You can always go back to the old pricing if you find your sales decrease enough to mean a drop in profits.
The business eCommerceFuel increased profits by 30% by strategically raising prices. Be careful not to jump too high too fast, and consider starting with a few of your best-selling products rather than raising prices across the board all at once. Then pay close attention to how your sales compare under the new prices versus the old so you know whether or not the market will easily bear the updated price. If it does, then you’ve just increased your profits without doing hardly any work.
How to Test Out Pricing Options
The why of eCommerce price testing should now be clear. The what, in terms of different tactics to try has been well covered. What’s left is the how.
You’ve got a few options for how to go about setting price tests up.
1. Set up A/B testing.
A/B testing is when you launch two different versions of something so you can collect clear data on which works best. It’s commonly used to test out things like CTAs, landing page design, and email headlines. You can also put it to use to see how some of the strategies above work for you.
You have to be really careful here, because you don’t want to risk angering customers or losing their trust by offering them two different prices for the same product on different devices or offering one customer a different price than their friend paid for the same thing. But quite a few of the strategies above can be A/B tested without running afoul of that risk. For example, trying out different font sizes and seeing if a change to how you write your numbers makes a difference should both be fine for A/B testing.
If you don’t know how to set up an A/B test yet, the trick is really in the technology. You can find a number of different products that make it possible for you to set up A/B testing on your website, and a few are even free, in case you’re not quite ready to commit to a paid tool.
2. Test different strategies at different times.
With any testing you do, it’s best to just change one thing at a time in the different versions of your website you release. If you both change the font and switch to a number that ends in nine at the same time, you won’t know which change accounts for any difference in results you see. If you test out each change, one thing at a time, over time you can make the various changes needed to optimize your website to make the most sales and profits.
Also be sure to keep in mind other factors that can influence a change in results at different times. If you try a reframing or anchoring strategy in the midst of the holiday season, an increase in sales could have more to do with people buying gifts than with the pricing change.
3. Test different pricing strategies for different products.
You don’t want to A/B test actual prices for the reasons described above, so what you can do instead is try out different pricing strategies for different, but similar products. If the product offering is different enough, testing out different prices won’t come with the risk of upsetting customers, but will give you an idea of what price points people are comfortable with. If a higher price works for one product, then you can extend the price increase to your other similar products as well.
4. Analyze results.
Data can tell us a lot, but it can be misleading if you don’t always take the time to sit down and really analyze it. For every eCommerce price testing strategy you try, take time to review the results and analyze why they turned out the way they did. And then move onto the next test so you can collect more data and insights into how your customers make their purchasing decisions.
Price testing takes time and work and comes with a bit of risk – if your products sell less for a time because the pricing strategy didn’t pay off, you’ll make less for that period. Nonetheless, the insights you learn from your testing can enable you to increase profits in the long run. A little hit tomorrow could help you make a lot more next year. The only way to know how much pricing changes and strategies can pay off for your business is to try them out.