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Having a successful “anchor baby” can have a beneficial effect on revenue and productivity. When we encounter a lower-priced version of a product just after seeing a higher-priced one, we are more likely to think the lower price is appropriate due to a cognitive bias known as anchoring. If a potential buyer sees a similar product advertised for $5000, the $2000 version may seem like a steal by comparison and prompt the buyer to visualize making a purchase.
Correctly valuing your goods and services is a fundamental part of building a prosperous company. The expanding study of behavioral economics explains the success of certain pricing strategies and suggests ways to implement them.
Anchor the infant down.
Knowing that functionally comparable items can be more pricey, positioning premium-priced products and services near similar, lower-priced offers that you wish to sell can persuade prospective clients to consider the lower-priced items as delivering significant value.
The number zero is a sales killer.
It is common practice in the retail industry to list prices that end with.99,.98, or.95 rather than.00. According to research published in the Journal of Quantitative Marketing and Economics in 2003, prices that end in zeros are interpreted by consumers as being relatively high. The majority of consumers, the report finds, consider $5.99 to be significantly less expensive than $6.00.
According to research published in 2011 by the Society for Consumer Psychology, including too many zeros in a price when quoting B2B services for a client proposal might be off-putting. It seems that if you put your price as $2995, potential customers will be more at ease with it.
Don’t settle for being a Toyota—be a Lexus.
At a study conducted by Vanderbilt University, it was found that patrons will pay more for a Budweiser beer in a high-end hotel bar than in a low-end watering hole. Why? Richard Thaler, a professor of economics at the University of Chicago, notes that the affluent may get away with asking more because of the prestige they are associated with.
Solopreneur consultants (so much more refined and deserved than a regular Freelancer, no?) are counseled to offer signals that justify charging premium pricing to boost revenues, according to this line of thinking. Make sure the people that matter realize how much of an asset you are. As a thought leader and authority, you can charge more if you teach at the university level, speak at prestigious business organizations, write for prominent print or online magazines, or run a popular newsletter or blog with thousands of readers.
Imposing Price Increases and When to Do It
Weber’s Law (1834) suggests that consumers are willing to pay a 10% premium for the products or services they regularly use, and some may not even notice the increase. You are aware that the need for your product or service, the number of competitors, and the perceived worth of your brand can all have an effect on your ability to increase prices.