The process of making a customer hit the buy button is a lengthy one.
It starts right at the beginning when you're setting up your store, filling it with products, and marketing it so people even know your brand exists!
Unfortunately, even if you increase traffic to your store, your leads can still fail to convert if your pricing strategies are impractical or outdated.
The good news is there are various simple yet practical techniques you can use to instantly boost your conversion rates.
How to set product prices on your store
Before we get started, let's take a look at how to initially choose product prices for your store as a jumping off point:
- Find out competing products: What would your customer buy in case your product is not available on the shelves?
- Find out how much the second-best product costs.
- List all the features or ways that make your product the best and estimate how much these differences are worth.
- List down all the ways the competing product beats yours. Don’t be biased as this can make your price lack precision. Once you know all the differences, figure out how they could be of importance to your customers.
- Now, calculate the price of your product as follows:
- Take the price of the competing product (second best).
- Add the worth of your advantages.
- Then subtract the worth of your competitor's advantages.
Now that your pricing is set-up, let's dive deeper into those strategies we talked about before.
1. Value-based pricing
Traditionally, manufacturers don’t show customers how they came up with the price for a certain product or what it took to make it. Buyers are merely expected to believe that the item is fairly priced.
In value-based pricing, the store shows their clients how much was spent in designing or manufacturing a certain product. The system is extremely transparent and is often used in affiliate eCommerce and drop shipping.
Everlane is one of the companies that uses value-based pricing to boost conversions on their sales pages. They detail out every cost that was incurred in making a product from the material, labor to transportation. Some of the advantages of this method include:
- Better customer relationships
- Increased profits
- Increased trust for your brand
Unfortunately, value pricing isn’t just something you can come up with out of the blue.
The method heavily relies on what value customers bestow on your goods. Thus, you need to talk to them and find out why they like your products and what brands closely compete with yours.
Customers love it when they get offers that have several options.
It helps them find a suitable plan for their needs, but still gives them a chance to make a comparison. But how can you know if you're getting the best offer without having something else to cross-reference with?
Anchoring can help you to set a baseline cost for your goods or services. Take a look at the following cart comparing laptops:
It's designed to help users buy according to their needs, but it's also communicating the perceived value of each item.
With similar screen sizes, larger hard drives, and drastically lower prices, the Toshiba or HP seems like a better deal when compared to the much higher priced MacBook Air. Without the addition of the MacBook, the other two wouldn't seem nearly as good of a deal.
Since most customers like to do some comparison shopping, coming up with product comparisons will help them make up their mind a bit faster with each of the products promoting the other, resulting in increased conversions.
3. End your prices with a 9
Although creativity and experimenting with new techniques is advised, sometimes it’s good to go with a traditional technique that you know works.
The power of ending your prices with a nine can work wonders on your conversion rates!
You may have noticed that both offline and online stores have a habit of ending almost all their prices with a 9. So the question is, why wouldn’t you want to try this technique out?
Thomas and Morwitz call this "the left-digit effect in price cognition," where customers are more likely to purchase a product with a nine-ending price since it's perceived to be smaller than a price just one cent higher.
What pricing strategy will you choose?
These are merely a few ways you can employ to make people hit the “buy button” and checkout on your store. If you stick to the most effective pricing strategies, all the money you've spent on marketing and lead gathering will not go to waste!
Do you know any other actionable pricing strategies that can boost conversion rates? Feel free to post them in the comment section below!