5 Psychological Pricing Table Hacks To Increase Conversion

9 min read 0 Responses
Kareem Mohammad 12 months ago

Let’s face it. You want your pricing table to convert better.

Everywhere, entrepreneurs like you can make mistakes in their pricing tables that ultimately cost them their conversion rate. Costing them sales.

Things like blending your CTAs into your colour scheme, using low comparison figures and not building trust on your payment page – are the culprit factors.

It doesn’t have to be this way. Some knowledge of psychology can immensely help you.

So, let’s focus on addressing 5 key psychological factors to keep in mind, while designing your pricing table.

1. Charm Pricing

Charm pricing is used everywhere.

Walk into any store. You’ll see it in action. And likely become charmed by it.

What Is Charm Pricing?

Charm pricing is essentially reducing the price of a product by a minor amount, to change the digits to the left of the product’s price.

Good examples of this are turning $20.00 into $19.99, $40.00 into $39.99, and $30.00 into $29.99.

charm pricing

How Does Charm Pricing Work?

The way it works is all to do with the way we perceive pricing, through a process called magnitude perception.

What our brains do is to gauge the number, left-to-right, on an internal scale of magnitude.

What does that imply?

Quite simply it means that we perceive numbers to be significantly lower or higher depending on the digits to the left, as opposed to those that come later. Our instinctive processing reads 199 to be far lower than 200, as an example, because of this.

If you want to learn more about the technical side of this, you can read about the Left-Digit Effect in Price Recognition here, as studied by Manoj Thomas.

How Can You Use Charm Pricing?

Here’s how –

Firstly make a list of your prices. For example:

$400, $300, $200 and $100.

Now reduce the left digit by taking off a penny or a dollar:

$399, $299, $199 and $99.99.

That is all there is to it. For the sake of covering all the bases, let’s look into what we do in the case of say, a $350 product. Obviously knocking off $51 to increase conversions is not viable, so what do we do?

There are two options. One would be to reduce it to $349, as this was proven in the study, to make the perceived price magnitude 0.4 lower – as opposed to the left digit difference that is 0.69 lower.

The other would be to explore another way of framing the price, explored below.

2. Price Framing

Price framing is a very prevalent concept in online marketing, because of how effectively it works when you’re offering things like online courses.

Especially those with that have a fairly large price-tag.

What Is Price Framing?

At its core, price framing is the way in which the price is being seen.

It’s as simple as that. But it’s also as broad as that.

There are many different techniques in price framing, you’ll have to judge which is best for you. We’ll be exploring three different examples:

monthly

annually

What price framing is all about is reducing the initial ‘shock factor’ of the price, while also presenting many reference prices for the purchaser to justify buying the product.  

How Does Price Framing Work?

As we learned previously, we judge prices based on a perceived magnitude scale that we automatically gauge.

Price framing works to lower our perceived magnitude of the price by making the initially seen purchase price lower than the value we believe it provides.

It sounds pretty confusing, so let’s use a simple example to demonstrate.

If the cost of an item is $20 including shipping charges, remove the shipping charges from the price. $15 + $5 shipping is perceived to be a lot cheaper than $20, despite being the exact same price.

What this example means is that we perceive the $15 for the product to be lower in magnitude than the $20 total, even though we know we have to add the $5 for shipping charges. This occurs because of how our brain is processing the magnitude of the price automatically.

The other aspect of price framing is the reference point. Let’s say your product is said to be worth $1000. But you’re offering it at increments of $250 instead of $1000.

Because you mentioned $1000, your potential customers will believe they’re getting a great deal for their $250.

How can you use Price Framing?

Referring to the 3 focus points mentioned above, here’s a simple explanation of how to re-frame your prices on your pricing table, so that they’re received better by your potential customers.

Additional Charges

When it comes to additional charges, always have them separate from your product price. You don’t want to trick them or anything, so make sure the additional charges are clearly noted.

This will change the way they gauge the price of your product in your favour.

Payment Plans

Instead of showing the full cost for your product, offer them a smaller amount paid over a period of time. So if your product is $1000, offer it to them for $199 for 5 months. This way their initial perceived investment is far lower, and they’ll be more likely to give your product a shot.

Here’s a good example of how Aweber uses this strategy with their packages:

aweberIs your product is giving value to your customer? Then they’ll have no problem continuing to pay further amounts each month – even after  the initial investment period.

Daily Equivalent

When you’re charging a subscription fee, show them how much the cost of your product works out to per day.

If it is $30 a month, clearly show it is $30 a month – then note that it works out to a mere $1 a day below. This makes the magnitude of the price to be perceived lower, by using the daily expenditure as a reference.

3. Trust Building

Trust Building

Why is including testimonials so important?

Ultimately, you’re trying to gain people’s trust as an entrepreneur. Money is the way this trust is demonstrated, but without an incentive to give you their trust – you’ll get little from your leads.

What Is Trust Building?

Trust building is pretty much what you would expect it to be.

It’s building trust with your potential clients and customers to, ensure that they trust you enough to purchase your product.

But it’s not just you that can make people trust you. Other people’s opinions matter too.

How Does Trust Building Work?

When people trust you, they’ll trust that your products are worth what you’re asking for. They’ll always think they’re getting a good deal from you, and they’ll want to support you if you can provide value for them.

It’s that simple.

How Can You Use Trust Building?

Get testimonials from your clients and customers. Put the testimonials clearly above, below or beside your pricing table.

testimonial

Watch your sales increase.

Obviously the only real factor to keep in mind here is that the testimonial should be from someone that means something, in your field of work.

For example, a testimonial from Neil Patel for an online marketing tool would be considered a huge vouch for your product.

neil testimonialAnd that’s exactly what Brian Dean of Backlinko has done.

A testimonial from Neil Patel on how good a local baker is, however, would be nowhere near as effective in creating a sense of trust.

4. Colour Psychology

color psychology

Humans get most of their perceptual information from visual input. Colors, then, are strong indicators that people rely on, to perceive things around them.

Given that certain colors are likely to elicit a certain effect from people, knowing what color psychology is can help guide your audience to understand you, your ideas, and your product, better.

What Is Colour Psychology?

Colour psychology is a branch of psychology that, as you may have guessed, pertains to the effect that certain colours have on our mood and reactions. It’s a huge field and has many implications, especially in the marketing scene. If you ever want to know more, tap it into Google.

How Does Colour Psychology Work?

color

While the ins and outs of colour psychology are debated, we have studies proving that colours do have an impact upon us.

But these effects fade very quickly in most cases. For example, if you go into a blue room – the calmness it induces would be for a very short period of time.

Some may argue that the fact these changes are so short-lived. makes them negligible.

However, any smart marketer knows that you only get a few seconds to attract your potential customer. So the impact colour psychology has, could be drastic.

For a much more in-depth breakdown of the psychological impact each colour can be associated with, check out this article on the psychological properties of colours.

How Can You Use Colour Psychology?

It’s actually really easy, especially for your pricing table. Pick the colours that correspond to the emotion you want to invoke in your customer, and create your table with them in mind.

So for example, you might want to make your buy button blue, to invoke a sense of trust.

Understanding colour psychology will help you to point your customers towards the preferred products you would like them to buy, while also giving them the ability to choose for themselves.

A solid example of this is making your other packages on your table grey, but your preferred choice in a yellow or blue – to encourage trust in making that decision.

5. Loss Aversion

loss aversion

It’s the biggest hurdle that any business has to get their customer to overcome, to sell their product.

But what is it, and how can marketers overcome it?

What Is Loss Aversion?

Loss Aversion is, as the name implies, a feeling of aversion towards any loss. The avoidance of loss is actually, psychologically speaking, prioritised higher than acquiring gains.

So for example, mentally we’re likely to prefer avoiding the loss of $5, instead of gaining $5.

When we weigh up costs in our mind, we may rate that which we lose higher than that which we gain. Losses are felt harder than gains.

How Can You Fight Loss Aversion?

Get your audience to feel like they would lose more if they didn’t buy, or would gain more than they lose if they did buy.

Here’s 3 tactics to help you implement that:

Bundling

You’ve seen it done before. Offer up your product at your asking price, and throw some extras in there as well.

For example, if you’re selling an ebook – offer a short video explaining some of the key concepts.

This works because it makes people feel like they’re gaining multiple products for the price of one. If they were on the fence about whether or not your product alone was worth the investment, the free goodies should tip the balance in your favour.

Scarcity

Run a time-limited or quantity limited sale and watch people snap up the offer.

But remember that once that time or quantity limit runs out, stop the sale. Don’t be a sleazy false-scarcity seller.

This works because it forces people to react and purchase with a sense of urgency. In doing so, there’s no time for the loss aversion mind-set to creep in and take control, they have to buy now or they will miss out.

Pre-order bonuses

Pre-order bonuses are a merging of scarcity and bundling that create an even more urgent sense of exclusivity.

They  get what they pay for while also getting a bunch of other free goodies purely because they paid before the product was ready.

This usually works, but can be ineffective if it’s easy for people to have reason to reconsider. As long as your product provides the value they paid for, this should work for you.

So there you have it, 5 in-depth psychological tips on how to improve the conversion rate of your pricing table. Just remember that the customer should come first. These tips are purely for enticing those on the fence about actually biting the bullet to snatch up your products.


About Kareem Mohammad

Kareem is a marketing blogger@plugmatter and a learner who loves to read and explore new things when he isn’t working and lives by the mantra - don't wish for it, work for it.

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