So…You have a great product – CONGRATULATIONS !
It can be anything – a gadget, a software, mobile app, service, really…anything
- Set your price
- Started selling it
- Getting excellent feedback’s from customers
Your only problem…there are just not enough sales…
Using analytics, you saw that people:
- Come to your website
- Understand your value proposition
- Reach the price page
- And then….too many of them…exit your website…never to return.
Losing those “almost” customers is very annoying and frustrating.
You paid so much for each visitor
they actually like your product
and in the last minute decide to let go…
It turns out that many companies are facing this challenge and requested me to write about How I’ve dealt with it in the past.
There are many strategies & tactics you can use to solve this situation to dive deeper and fix things ( I will discuss them in my next blog posts…)
I would like to share with you a process I’ve been using a lot to help companies in similar situations, that really succeeded boosting their product sales.
It’s a unique process based on 3 simple steps:
- Optimizing the offer stacking strategy
- Optimizing the Pricing strategy
- Optimizing the Pricing page using CRO ( Conversion Rate Optimization)
Are you Busy right now ???
I am going to dive deep and reveal some very cool stuff…
It’s around 10 minutes read…and I don’t want you to miss it
So If you’re busy now, consider subscribing 🙂
Not busy ? Great !!!
Here is the exact way of how I’m doing it:
Step 1 – Offer Stacking Strategy
We need to understand that each prospect have different needs.
- Some have a lot of time, some need to get results real fast
- Some have in-house manpower/expertise, Some don’t
- Some companies are 2 people, others are 5,000+
- Each prospect is in a different context. The context is changing the importance of premium product features for him
Let’s review an example – “To see a football game” – we can have the following “segments”:
- Not willing to pay at all – will watch after 1 week on TV for free
- Willing to pay 2$ to watch at home live.
- Willing to pay 10$ to watch from the field ( bad places )
- And some will pay 2000$ to see it from the best seats.
How do you know how many of your prospects will be willing to pay a specific price ?
It turns out that as long as there is NO upper limit for the amount people can pay, The behavior of your audience is very predictable 🙂
I’ll be using my own example, but you can later use your own numbers…
Let’s assume that :
1000 prospects seen my offer
86 of them bought the product
45$ was the price of my product
I will now head to the 8020Curve website
and fill in:
Total number of members = 1000
How many members responded = 86
What was the value of the output = 45$
and will get the following graph:
From the curve you can see the amount of money your audience is willing to pay for a product that will be customized for his needs.
You can see that the actual product (A) price is in RED ( 45$ bought by 86 people )
What we can also see is that from those 1000 people, it’s most probably that:
210 people will be willing to buy a simpler product B if it will cost only 20$
32 of the people will be willing to buy an improved product C even if it costs 100$
B & C can be the same product with less/more features
They can be exactly the same product but for different level of usage
They can be exactly the same but with different level of service/warrenty
or any combination…
Now, you can head back to the 8020Curve website,
Fill in your own numbers
Based on the results, brainstorm with your team and create 3 “packages” of your product – Each with a different price
Just Remember – In any segment of your market, The top 20% of the people, Will generate 80% of the value for you ( revenue,..)
Step 2 – Optimizing the pricing strategy
Designing a pricing strategy is part of designing a product or service!
A fundamental layer in the relationship you are creating with your customers is being honest about the different packages of products/services you offer
That being said, there are ways to guide your prospect’s preferences towards the products or services that you are most interested in promoting.
One of the best way is using the Decoy effect:
“the decoy effect (or asymmetric dominance effect) is the phenomenon whereby consumers will tend to have a specific change in preference between two options when also presented with a third option that is asymmetrically dominated. An option is asymmetrically dominated when it is inferior in all respects to one option; but, in comparison to the other option, it is inferior in some respects and superior in others. In other words, in terms of specific attributes determining prefer-ability, it is completely dominated by (i.e., inferior to) one option and only partially dominated by the other. When the asymmetrically dominated option is present, a higher percentage of consumers will prefer the dominating option than when the asymmetrically dominated option is absent. The asymmetrically dominated option is therefore a decoy serving to increase preference for the dominating option.” – Wikipedia
Let’s use some examples to understand better:
Example 1- Promoting the expensive option:
When you’re going for a movie and presented with 2 options – which will you choose?
Well…for most people…since the price is in the same proportion to the quantity…it will mainly depend on the length of the movie 🙂
What if just by chance they will introduce a 3rd option :
This simple addition will shift the preferences of many people toward choosing the expensive 7$ popcorn.
Example 2 – Promoting the expensive option by an extreme
This time we will introduce a 3rd option that is just a bit better than the expensive one but much more expensive:
This is the version I love the most! Not only that in most cases it performs the best…
Also as we saw in the Offer stacking section, there will always be people who buy the most expensive package !!!
So we should always offer the Mercedes, the Highest VIP, the ALL included,…
Example 3 – changing the price of the cheap option
Here is an example from a test done by Usabilla:
This was the initial state (In pink the % of prospects that chose each option)
They created a treatment that simply raised the price of “small” from 49 -> 79$/month
(In pink the % of prospects that chose each option)
We can see that this simple change created enough asymmetry so that users spend $10 more on their Standard Plan.
Remark: In their blog they only mention that “We invited 50 participants to each test” but they don’t give the details on how many participants didn’t choose any option in each case. It is reasonable to assume that since now the minimum price was 79$/month, more participants decided not to buy anything…and this is a critical parameter to follow when you use this tactic.
Step 3 – optimizing the pricing page using CRO
Once we’ve decided on our offer stacking strategy and optimized the prices according to the decoy effect,
Now it’s time to use a mix of Persuasion patterns + great design to help us put everything to work
Here’s a pricing page that was optimized…I’ll use it as an example:
Like most “Price compare” pages what makes this page so powerful is that it’s
Changing the essence of the prospect decision !
By giving 3 optional packages they are not only tailoring to different customers needs, they mainly change the decision of the user from “Should I buy this product?” into “Which package is right for me” – just like the waiter in the restaurant will never ask you “would you like to drink” – but “what would you like to drink?”)
There are 3 more techniques that make is such a HIGH Converting page:
#1 Using the decoy effect in action !
The main goal of the 3rd option (Advanced) is to make the default one ( Pro) be perceived as much more attractive, they make the 3rd option very expensive on purpose to show how great the Pro option is in compare. Just imagine how will your decision would have changed if there were only 2 options ( 25/49 )?
In any case – this page is NOT target for agencies !!! they use a different marketing channel for big agencies…
The secondary goal of the 3rd and most expensive option is…to acquire the high level customers ! Remember the offer stacking graph? no matter what you sell and at what price, there will always be the customer who wants to buy the very best and willing to pay for it. ALWAYS !!!
#2 Using StatusQuo-Bias Pattern
“Humans tend to accept the default option…The current baseline (or status quo) is taken as a reference point, and any change from that baseline is perceived as a loss.”
The page lead the choice of the user by defining a default option (Pro) using position, colors and great copy ( everyone wants to be conceived as a “professional marketer”)
Have you noticed that the “v” are in green just like the 38% discount of the Pro option ? this is not a coincidence ! it’s another connection done automatically in the prospect subconscious.
#3 Showing prices already after discount
As a default they show the prices when you pay annual, the prices already contain a big discount that make their offer competitive, especially when comparing to other vendors annual prices. The big push they give for an annual membership is really important for them because usually for the customer to get a significant ROI it takes more than 1 month.
I hope you’ve gained valuable insights on How to improve your pricing strategies & Pricing page design from this in-depth article.
Have any question ? Your own technique? a HIGH converting pricing page you know?
you’re most welcome to leave a comment