Shoppers are continuing to shop around, visiting at least three major retailers every month on average. As a result, brands ands retailers are facing constant pressure to keep prices in check.
However, there is an absolute orchard of low-hanging fruit in the form of applying shopper psychology: Specifically, the psychology of price. Based on research in cognition and behaviour, certain prices are more effective than others. Even if you don’t find the exact sweet spot, you can make small, yet powerful adjustments to maximise the effectiveness of your price.
In this article, you’ll learn how people process numerical values, and 7 techniques to optimise the perception of your price accordingly.
Reduce the left digit of your price by 1
Since we read numbers from left to right, while evaluating “2.99,” the magnitude encoding process starts as soon as our eyes encounter the digit “2.” Consequently, the encoded magnitude of £2.99 gets anchored on the leftmost digit (i.e., £2) and becomes significantly lower than the encoded magnitude of £3.00
Our perception of prices can be influenced through the way we mentally process them. Depending on the ease of processing (e.g., easy vs. hard), we can perceive different values relating to a price. It is known that our brains use more resources to process phonetically longer prices (which is harder and takes more mental processing). Since we use a larger number of mental resources, we falsely perceiver that those prices must be larger.
Position prices toward the bottom left
Due to our association between ‘up’ and ‘good’, priming the spatial concept of ‘up’ can trigger associations with ‘good’. Researchers found that people conceptualise numbers on an imaginary horizontal line, with numbers growing larger from left to right.
Because we perceive smaller numbers as belonging on the left, positioning prices toward the left, either on the shelf edger label or on any price-marked-pack, will generate perceptions of a smaller price.
Since we can also associate numbers with a vertical magnitude (with smaller numbers positioned toward the bottom), you might want to position your prices toward the bottom-left.
Use a smaller font size
In addition to directional cues, the physical size of your price can also influence people’s perception.
Thanks to processing fluency, you can influence people to perceive your price to be smaller if you display that price in a smaller font. This tactic is particularly effective when you contrast your price with a larger sized reference price.
Apply the rule of 100 to discounts
When you offer discounts, you want to maximise the perceived added value. That way, people feel like they’re getting a better deal.
Consider a £30 bottle of champagne. Which discount seems like a better deal: 20% off vs. £6 off? If you do the math, both discounts are the same monetary value. However, one discount has an advantage over the other because of the rule of 100
- When your price is under £100, use a percentage discount (e.g., 20% off).
- When your price is over £100, use an absolute value (e.g., £20 off)
In both cases, you’ll be choosing the discount with the higher numerical value. which researchers have proven, will influence people’s perception of the size of the discount.
Look beyond price
Instead of focusing on just the price, try adjusting your value proposition to better communicate the value you brand offers.
- What makes your product special?
- How is it better than other products?
- Why would customers want/ need/ enjoy it?
Quite often, you can solve your pricing challenges by communicating the value more effectively.
Please, please, please recognise that these often small, insignificant bits of paper, printed in-store from a head office template are far more valuable that the accountants would ever believe. Our own research has seen Shelf Edge Labels alone increase sales by 19,%, 44% and even %100%. It's time to recognise their true worth!
If you like these 7 examples, please do reach out, as I have 481 more!
Adcock Solutions have been improving the marketing communications of leading brands and retailers for more than 25 years. We explain how your customers think and make decisions so that you can engage with them more effectively.
Come to us for Behavioural Science insights and expertise that improve your brand's visibility, appeal, engagement, and sales.
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