One of the hardest things to get right when you have a new product or service is pricing.
It requires a beautiful mix of art and science. And, even when you think you have it right something changes and it’s probably all wrong again.
I’m no expert. Far from it. But there are a few tips I’ve picked up over the last few years of watching people who are much better at it than me.
When you stick to one price you only find out about one point on the demand curve. So, don’t be scared to change the price.
There are lots of ways that you can do this. You don’t have to pick just one.
- Offer limited time specials – a.k.a. “Cinderella” pricing (be quick … offer expires at midnight tonight!) If it works you can always extend the offer and even make the change permanent, but if it doesn’t you can revert to the normal prices without feeling bad about it.
- Offer discounts to certain groups of people. Student discounts are one common example. But, you can be even broader – e.g. special prices for everybody who is not already a customer.
- If you have a subscription price offer people the chance to pay more up-front – for example, 15 months for the price of 12, or an annual price to compliment your monthly price.
- Put the price up! This last one can be terrifying, but if you have a successful product there is every chance that people would pay more for the same thing. At least you should do the maths and understand the impact that different price points have on your total revenue.
2. Step away from your rational brain
Look around and see that most prices end in a 9. The reason this works is not rational, and can often be difficult for smart technical people to get their heads around, but that doesn’t mean you should ignore it.
3. Remember “Goldilocks”
You know the fairy tale – the little bear’s porridge is too cold, and the big bear’s porridge is too hot, but the middle bear’s porridge is just right.
Seth Godin calls this “triangulation“.
Think about how you can provide different price points. If you currently have only one price point think about how you can introduce a new variation of your product at a cheaper price, and another (with additional features or benefits) at a higher price. The idea is to use these new options to make your existing price look “just right”, so it doesn’t necessarily matter if not many people actually choose them or not.
Obviously this is not a full list.
evil tricks pricing techniques have you seen or used?
If you’re interested in the behavioural economics of pricing I recommend a book called Predictably Irrational by Dan Ariely. I have a free copy to give away courtesy of Fishpond. To go in the draw just add a comment below – the best pricing suggestion wins.