Recently, we've seen just how important a customer's perception can be to your bottom line. If you price too low, you run the risk of being perceived as 'cheap' and low quality, where if you price too high, the perception is that your product is too expensive. So the big question is how do you hit that sweet spot? The price where perception meets reality.
There doesn't appear to be a silver bullet for this one unfortunately, but there are a few well established guidelines that you should consider when setting your pricing.
THE CHARM PRICE
Multiple studies have now concluded that putting a "9" in your pricing makes a significant difference into it's attractiveness. Initially we thought this sounded like a bit of an old wives sale tale, and could never understand why companies continually put their prices at '$9.99', but it's been shown that having your pricing adjusted to this can increase your sales by 24% - and that is significant.
TEST THE SWEET SPOT
This is the big one. Pricing has been shown to, on one hand, give a perception of value and equally, on the other hand, a of a lack of quality, so it's really important to figure out what your consumer thinks is the right price. Funnily enough, this was pretty much perfectly shown by Kanye West recently - he opened a pop up store and started charging exorbitant prices for his "one of a kind" t-shirts. People were more than willing to pay this price, until they noticed the generic brand tag inside the t-shirt which told them it was just a cheap product with fancy sign writing on it. Equally, the Warehouse in New Zealand has had to battle a 'cheap and nasty' perception for the last few years, despite bringing in higher quality products.
DO RIGHT BY YOUR CUSTOMER
You won't find this one in any text book, but we strongly believe this is a critical part of the equation - particularly for repeat business. If you set your price as low as possible (without going below the perception of low quality threshold), you will ensure clients continue to return again and again. We certainly keep this as a key pillar of our pricing.
The last little takeaway we'd like you to think about as you read this blog is to think about how you yourself perceive products from now on. Don't just buy something because it is more expensive, and equally don't buy something simply because it is cheaper. Ask why the price is set at where it is. Think about the product, not the price. 543 will continue to keep our prices as low as possible and hope that we can debunk the 'cheap' perception by providing high quality website and marketing for our clients. They understand we can do that be reducing our overheads and working with systems that save them money without compromising on quality... Hopefully that means we hit the 'sweet spot' for pricing!
Pricing your services & products