Hi! My name is Konstantin Goudkov. Just like you, I own a business with products to price and sell. Like you, I had heard that as little as a penny's difference in price could dramatically impact sales. Should my products' prices end with .95 or .99? Or maybe .98? Or a whole dollar amount? I was searching for the answer but kept getting conflicting information.
The only consistent answer I could find is "It depends!"
And the worst part is when I asked "Depends on what?" -- I could not get a clear answer. This led me to believe that "It depends" really means "I don't know."
Skipping ahead, past a year of studies and research, I'm delighted to tell you that I know the answer. The answer to successful pricing strategy really is "It depends" -- but now, I also know the answer to the question "Depends on what?" And I'm going to show you the real, solid answer today.
The information I uncovered will enable you to pin-point the exact dollar and cent combinations that produce most sales.
Let me explain what I mean.
Have you ever heard an expression "The price was just right"? Consumers don't rely on logic, but use their emotions to justify the decision to buy (or not to buy). Merchants cannot rely on emotions. We must use logic and common sense to sell. Otherwise, we go out of business. So what I'm about to tell you is pure logic. Keep that in mind, and get ready for some heavy reading -- what follows might be the most important piece of information you'll ever read about selling to consumers.
For starters, let's examine two seemingly independent facts.
$20 is perceived to be much less than $20.00 so you should hide the cents for whole-dollar prices. This fact is based on a psychological principle which makes us assume that the narrower numbers have lower values. So the human mind sees the number $20 as less than $20.00.
$19.95 is perceived to be much less than $20.00 so you should set your prices below a whole dollar. Another psychological principle which states that people often perceive a value below a whole dollar as significantly less, even when the difference is just a few pennies. This principle dictates that the human mind puts most emphasis on the leftmost digit while asserting the value of a number.
According to these well-known "truths" we have established that:
$20 is better than $20.00
and
$19.95 is better than $20.00.
But which one is better:
$20 or $19.95?
In the case of $20 vs. $19.95, $19.95 performs better. I'm sure you already know this. It has almost become a textbook example.
Unfortunately, the same principle does not work across all price points. Not all .95's are better than whole-dollar prices.
For example, in these two cases:
$69.95 vs. $70
and
$71.95 vs. $72
We have different winners. In one case, .95 beats the flat price, and in the other case the flat price beats .95. Even though those two price points are close, we get opposite results. I'll show you which ones are the winners for each dollar value on the interval from $4 to $99.
I'm sure that by now you agree that the whole-dollar-vs.-.95 dilemma is complex enough, but what about other popular cent values, like .99?
Here, things get even more difficult than with the examples listed above.
Sometimes, a $XX.95 price tag pulls significantly more sales than $XX.99, and sometimes it's the other way around. For certain price points (and products), the difference in conversion rate might be as much as 5 times! Of course such extremes are rare and you should not count on such drastic increase in sales. But you should always evaluate your price tags and use the best cent value for a given dollar value.
As I said before, the decision on which cent value to use is even more complicated.
In the following two cases:
$14.95 vs. $14.99
and
$44.95 vs. $44.99
In one case, .95 beats .99 and in the other case .99 beats .95.
The only assumption we can make is that for some dollar values people seem to subconsciously add that one penny (and turn .99 into a higher whole-dollar price in their mind) more often than for others. So in such cases (where they would add a penny if the price were .99), they seem to consider .95 to be much less than .99 and therefore, not a higher whole-dollar value. One penny vs. some cents.
After spending much time trying to figure out the best way to price my products, I realized that such problem does not have a linear or a simple non-linear solution.
Before we go further, let me define a concept of price popularity so I can explain the rest of my findings.
Price popularity is a measurement that indicates how often you would see a given price tag if you were to start looking at different products and services offered by different companies on random.
If you were to look at 150,000 random items sold on the Internet and found 3618 items with a price of $19.95, and 1531 items with a price of $19.99 -- you would obtain price popularity of $19.99 and $19.95.
By itself, price popularity values are not a very useful. But we get very interesting results when when we compare popularity of related price points. In other words, finding that we've encountered $19.95 twice as often as $19.99 is a really important piece of information -- this is the core of my findings.
After a serious amount of research and testing, I noticed a correlation between the popularity of a price and its effectiveness. I started picking sets of related prices (like $19.95 vs. $19.99) and performed split-run tests to see which price converts better. Once I got the results of the split-run tests, I compared them to the price popularity.
Each of the tests I performed proved the concept of price popularity to be true. Prices that occur more frequently in the marketplace perform better.
What I encountered is described by a famous (in some circles) phrase "The market knows best."
When viewed as a whole, a large number of unrelated entities -- each acting independently in their own self-interest -- tend to converge on the best possible solution.
Simply put, a bunch of separate store owners all over the market place have the best possible sense and knowledge of the market, when we look at them as one big entity. It's a law of nature. I don't know how or why, but this is the way things are.
Looking at this phenomenon from the opposite angle, we can say that to some degree the marketers shape the market. Do you remember me mentioning the phrase "The price was just right" in the very beginning?
When people are used to seeing one particular price tag more than another, they will naturally be more receptive to the former one.
For example, all else being equal, which price looks more natural to you $19.95 or $18.63?
If you were looking at a product page on some website, reading the description, checking out the product image -- ready to order -- which of those prices would make you pause and think "What's up with that price tag? Is this place trying to set a price in a certain way to make it appear cheaper? Is it really a good price for such product? Can I find a cheaper price elsewhere?"
You do not want your customers thinking about your price. You want them feeling it. You want them to feel that the price is just right. You want them to accept the value of a price tag and concentrate on the product itself, it's picture, specifications, and the description. So that once they are done reading, they hit the order button with less hesitation.
I'm sure you agree there is a huge difference between $19.95 and $18.63 in terms of the emotional effect on your prospects. And if you agree with that, you should also agree and understand that such difference exists between other price values, like $19.95 and $19.99. In this case, the difference is much smaller, but it still exists. And it affects your prospects' decisions whether you (or they) realize it or not.
Also, if in real-life market, most products of the $20-range were sold for $18.63, then we would accept $18.63 as a "normal" price tag while thinking that $19.95 is somehow weird. This is a real example of marketers shaping the market. Consumers are used to seeing some price tags more often than others, so using "the right" prices makes you appear "more normal" to your prospect on a subconscious level.
Once I realized what I just told you about this dual power of marketplace, I got a novel idea. I checked all prices from $4.00 to $99.99 -- cent by cent -- and compared popularity of all related price points as defined by the real live market.
I scanned and analyzed as many price tags as I could get my hands on.
Once I was done scanning, analyzing, and structuring data from all over the place, I had in my hands a comprehensive listing of price popularity based on the examination of 15.3 million price tags. After using this data for several different projects, I compiled a report which I want to present to you.
My report covers the following topics:
- When to use .95 and when to use .99
- When to use .95 instead of the whole dollar and when not to
- When to use .98 instead of .95
- When to use .98 instead of .99
- When it's better to use .97
- 18 most popular cent values (apart from .99, .95 etc.)
- Cent values that are most appropriate for a given price range
- Popular price points across the whole range
- Dollar values that are most appropriate for a given price range
To the best of my knowledge, there are no similar reports available to anyone outside of the Fortune 500 management or sold for less than tens of thousands of dollars.
And today, you will gain access to this information.
Of course, there is a matter of price.
I'll let you have my report for only $49.99 if you promise not to share it with anyone else.
And if after changing your prices according to my findings your overall sales do not increase by 5 to 10% then I want you to ask for your money back. I'll refund your money to the penny without asking a single question. The only thing I ask in advance is that you don't just sit on this report, but use that data!
I've applied these principles with people and companies across the board -- regardless of the industry, product, geographical location, or any number of variables -- intelligently adjusting prices does wonders for the bottom line. Many retailers I worked with successfully use this report to increase sales -- be it an on-line store, a brick and mortar store, a craft show or a flea market -- it works!
It is only common sense that properly pricing products increases sales for any business. In other words, it will work for you! There is simply no reason why it shouldn't.
Click here to order my report for only $49.99 (instant download).
- Save valuable time and money on costly research -- examining 15 million prices on your own would take you untold months of time, or take a look at the fees of various market research companies!
- Stop making costly mistakes -- know exactly what price to charge without any guesswork and make your competitors lose sleep trying to figure out how you manage to outsell them!
|
Sincerely, Konstantin Goudkov PricePointReport.com |
|
P.S. Have you considered what you've got to lose if you don't set your prices right? Well, let's see, shall we? Each day you wait will cost you sales, and once your competitors get their hands on this report, you will never get ahead. The best you will be able to do is play catching up.
Order today and I guarantee that all the extra sales you get will cover this investment of $49.99 in less than a week. If not, I'll refund your money, plain and simple. And even though you'll see the results in less than a week, I extend my guarantee for the whole 3 months because I know that it works.