The worst thing you can do is to try to wing it when it comes to pricing. Many entrepreneurs and marketers make this mistake. Today we will take a look at some fascinating studies in behavioral economics that paint a clear picture of how you should properly set your prices—without the guesswork.
Let’s get started.
1. Similarity Can Cost You Sales
When we discussed building a website customers love, I mentioned the importance of limiting choices to avoid “action paralysis.” Too many options can be demotivating to consumers.
Since this is the case, you would expect that having identical price points for multiple products would be ideal, right?
However, according to new research from Yale, if two similar items are priced the same, consumers are much less likely to buy one than if their prices are even slightly different.
In one experiment where researchers had users choose to buy (or pass and keep the money) two different packs of gum, only 46 percent made a purchase when both packs were priced at 63 cents.
Conversely, when the packs of gum were differently priced—at 62 cents and 64 cents—more than 77 percent of consumers chose to buy a pack. That’s a huge increase over the first group!