Stop using discounts - and some other thoughts about prices (3)
Stop using discounts - and some other thoughts about prices
I see everyone and their dog discount their prices in their dropshipping stores. Now 30% off and such.
But there is so much more than that. Plus it's a stupid practice if you do it because that's what you have seen others do.
First of all, your pricing - to a large extent - is an expression of your positioning.
If you price your products low, you're basically telling your customers it's not going to be a great product.
Plus, everyone else is doing the exact same thing.
So why not increase your prices and position yourself a bit higher?
This sets your store apart from all the others and gives your better margins.
Not only to be more profitable, but also to invest in :
- a better quality product
- better packaging
- better customer service
- better copywriting
Where the last one should be first actually. But you should have the rest to match.
In other words, your copywriting is the promise, your offer (product + service) should match that promise
But you don't have to stop there.
If you want to address the majority of the available customers, you introduce 2 additional versions.
One more expensive and a cheaper one.
All with different attributes, so that there's a perceived difference for the customer.
This will increase sales as customers will often go for the middle option, especially if they are unfamiliar with the product.
When there are 3 options, they don't want to pay the max amount, nor do they want to get the cheapest option. As that might disappoint them, which is something they want to avoid.
Because in an uncertain world, people are not looking for the optimal solution. They are looking for a solution that will be good enough to satisfy their needs, with the minimum risk of disappointment.
Which is a strong case for a brand name. Because a brand has skin in the game - in other words - a reputation to uphold. So customers, when in doubt, would rather choose a safe solution than take a risk on an better sounding solution from a seller with no reputation.
Sure, the product might be better. But would you risk it when the other one is good enough for your needs and more likely (in the customers mind) not going to be a disappointment?
This btw is why we keep our own prices - for the exact same item - within a certain bandwidth of our competitors who can only compete on price. We built (and are still building) our brand, so we don't have to be as low as the competition. But for a 150 euro product, I don't want to be higher than 159.99
159.99 is psychological pricing, where it still sounds like 150, but really is closer to 160. But it falls in the acceptable range. And research has shown that you can get as close to the threshold without the perception changing.
So 159.99 is as good as 154.95 or 159.95. (For more details read "Confessions of the pricing man - Hermann Simon).
If you have enough volume on an item, this is something worth testing (we can't because we have fairly high ticket items and a broad range, so not enough conversions for testing).
This of course goes for everything. If you can, make sure to test.
The most important takeaways are that:
1. People aren't logical. A lot of their behaviour, if not most of it, is emotional. So what logically makes sense, doesn't alwasy translate in increased sales.
2. "The opposite of a good idea can be another good idea".
So pricing really low can be a good idea, but so can pricing very high. Just don't do what everybody else is doing.
( quote comes from Alchemy - Rory MacDonald)
I hope this gives you some material to think about and test.
Good luck!
Great stuff!
If someone is interested to deep-dive into pricing strategies, then check out Nick Kolenda. This guy is insane! 
Here is his blog post about psychological pricing strategies.
https://www.nickkolenda.com/psycholo...ng-strategies/
@wakeboarder - that's a great resource - thanks!
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