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Discussion: Pricing Experiments You Might Not Know, But Can Learn From | ConversionXL

Lots of entrepreneurs struggle with pricing. How much to charge? It’s clear that the right price can make all the difference – too low and you miss out on profit; too high and you miss out on sales.

Don’t ask, can’t tell

Asking people what they’d pay for and how much rarely works. For one thing people will tell you what they WANT to pay—which is obviously much less than what your product or service is actually WORTH. Second, what people say and what people do are very different things.

When it comes to money, people are unable to predict accurately whether they’d pay or not. It’s much easier to spend hypothetical dollars than real ones.

Also it’s worth remembering that people really don’t know how much things are worth, what’s a fair price (which is the reason TV-shows like “The Price is Right” can actually exist).

William Poundstone, the author Priceless: The Myth of Fair Value says this:

“People tend to be clueless about prices. Contrary to economic theory, we don’t really decide between A and B by consulting our invisible price tags and purchasing the one that yields the higher utility, he says. We make do with guesstimates and a vague recollection of what things are “supposed to cost.””

People are weird and irrational, and there’s much we don’t understand. Like why do shoppers moving in a counterclockwise direction spend on average $2.00 more at the supermarket?

Why does removing dollar signs from prices (24 instead of $24) increase sales?

What will work for you depends on your industry, product and customer. When you try to replicate what Valve did to increase their revenue 40x, it might not work for you, but then again, why not give it a try?

Here’s a list of pricing experiments and studies you can get ideas from and test on your own business.

Top Comments

Rick Noel, eBiz ROI, Inc.

Really thought provoking with some great examples. Relating to my own personal expriences, each of these experiments proves true in my own pricing evaluations and thought process. I especially like the beer on the beach example (on multiple levels:-). The anchor in the real estate pricing example was interesting as well. Thanks for sharing.

Phil O’Doherty

Very nice. Perception plays such a huge role in pricing. People are always benchmarking and rationalizing the price off against some other expenditure. Unfortunately for me that is usually beer…which isn’t cheap 🙂

Bruce Stewart

Great value article. The stand outs for me were “Can I split test the price?” and “They changed the experience of buying coffee, so the perception of what people were getting, changed.” it is all in the way of how you package it.

Bill Dett

Great article. We’ve done a lot of price testing. One comment: Dan Ariely’s “Economist” experiment is bogus. We tried that – on real people vs. his hypothetical – and found the decoy price makes no difference. Even the Economist doesn’t price that way any more.

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Pricing Experiments You Might Not Know, But Can Learn From.

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