Pricing Strategies To Get More Profits
1. The Nine and Zero Effect. People associate the number nine with value and zero with quality. Look at the difference between fast food and a gourmet restaurant. A burger meal can sell for about $4.99 while a gourmet entree at the best place in town may go for $30. So the psychology of pricing isn’t so much about gaining additional sales because the price appears to be lower, it’s about what the price communicates about your offering. So which do you want to communicate? Value or Quality? Now you can price accordingly.
2. Payments to Promote Satisfaction. Anyone who has ever paid for a gym membership and quit the second month has been part of this pricing strategy. If you offer a one-time payment, customers will perceive the item free after a while and not use it as often — thereby limiting satisfaction. Customers who pay more frequently for a product or service use it more often and perceive more satisfaction. So you’re better off charging monthly rather than a one time fee.
3. Prestige Pricing: Higher prices connote higher quality. Luxury brands are the perfect example of this strategy. A latte at Starbucks has a higher perceived value than a basic coffee with cream. Simply improving the look, packaging, delivery or promise of your product you can justify a higher price and support a prestige pricing strategy.
4. Anchor Pricing: When consumers are unfamiliar with a product, they will use the highest priced model within a category as an anchor. Private Label brands in the supermarket are a good example of this strategy. They are placed close to the branded product and the price is typically 15% lower.
5. Quantity Suggestive Pricing: Consumers are receptive to purchasing items in suggested quantities. This is the strategy that is responsible for my eating too many Arby’s sandwiches. The offer typically reads “5 for $5.” When you suggest how many you want your customers to buy and give them an attractive price, they will do what you tell them.
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I’ve heard so many people complain about Starbucks’ coffee and how it doesn’t taste as good as other coffee. I personally can only drink Starbucks’ Americano coffee. Plus the ambiance in a Starbucks is part of the whole reason why I go there and why I’m a loyal customer. Say what you will, but Starbucks definitely knows how to market and brand themselves!