You can make prices seem lower by adjusting the surrounding elements. How? Here are 5 simple techniques…
No matter where you display your price, there are always going to be elements surrounding it. And there are certain adjustments you can make to those elements that will cause people to subconsciously perceive your price to be lower. And in this video, I want to talk about five different techniques to accomplish that goal.
So the first technique involves the some words and phrases near your price. Specifically, you should be careful about using size-related language.
So when people describe the benefits of a product, a lot of the times it’s very natural to describe things that are large in magnitude. So our product has a large amount of space, we have a high processing speed, you’ll generate a big increase in your revenue, etc. Those statements seem innocent and harmless. But they can be really detrimental.
You’ve probably experienced the Stroop effect before, where you have more difficulty reading the names of colors if those names are displayed in a contradictory color. That incongruence causes interference when your brain processes the name. Well, that same underlying effect can occur when you encode numerical magnitudes.
If nearby words are related to a large magnitude, such as “large,” “high,” “big,” “increase,” then people will perceive your price to be congruent — i.e., higher in magnitude. So just like the Stroop effect where it’s more cognitively demanding to separate the visual and lexical dimensions if those two dimensions are contradictory, the same effect applies here. If you prime a large LEXICAL magnitude — by using words like “big” and “large” — people are more likely to make the inference that your price is high so that the NUMERICAL magnitude is congruent. It would take more cognitive resources to perceive a LOW numerical magnitude because that would be incongruent with the LEXICAL magnitude that was just primed.
So if you want people to perceive your price to be low, then make sure that the lexical elements near your price — i.e., the words and phrases — are congruent with a small magnitude, so words like “small,” “low,” “little,” etc. Those words will prime a low LEXICAL magnitude, and so people will be more likely to adopt a congruent NUMERICAL magnitude. And they’ll be more likely to perceive your price as low.
Another technique is to incorporate any high numeral near your price. In one study, people viewed a camera to be less expensive if they had been subliminally exposed to a high price. So even though they weren’t consciously aware of that exposure, that high number became a baseline for which they made a SUBCONSCIOUS comparison.
And that effect is pretty versatile. The exposure doesn’t have to be to a price. Exposure to ANY numeral will produce that same effect. In a follow up study, the same researchers flashed units of weight — such as 99 grams — and that exposure still influenced people to perceive a price to be lower in magnitude.
And there are a lot of easy ways to subtly incorporate a larger number. Suppose that you sell a productivity app for phones. You could mention the total number of customers who have downloaded the app or if you wanted to get fancier, you could have a counter that displays the total number of hours that your product has saved people.
Now, if you’re selling MULTIPLE products, you could strategically arrange and structure those products so that you allocate focus toward higher priced products — to reinforce that high numeral. For example, you could add visual distinctions to the higher priced products. Or, in retail, you could put higher priced products on shelves that are at eye level. By directing their focus toward those high numerals, you inflate the baseline that they’ll be using to evaluate your price. And the next technique is particularly effective at doing that.
When arranging the products that are near your price, you should think about arranging them from highest price to lowest price. In one study, researchers analyzed two different beer menus over the span of 8 weeks. And when the menu sorted prices from low price to high price, the average sale was $5.78. However, when the menu sorted prices from high price to low price, the average sale increased to $6.02. And there are two primary reasons why that effect occurs.
First, when people scan the top of the list, those initial high prices influence them to generate a higher reference price. They form a general magnitude for what the typical price of a beer would be. Once they generate that value, they compare that value against all of the other prices in the list. And suddenly those prices seem pretty fair. If you were to sort prices from low to high, those initial values would lead to a much lower reference price. Suddenly the prices would seem a lot more expensive compared to that lower reference price. So people would be more likely to go with a cheaper option.
Now…that’s the first mechanism. The second mechanism is loss aversion. As humans, we tend to focus on losses, rather than gains. And if you sort prices from low to high, with each new option, people are gradually losing the ability to pay a lower price. When people move from $4 to $5, for example, they’re losing the ability to pay a price that’s cheaper than $5. And that’s painful.
However, when you sort prices from high to low, then with each new item, people are gradually losing quality. When people move from $8 to $7, for example, they’re losing quality from those higher priced beers. And that’s painful. So people feel more motivated to retain a higher quality / higher priced beer.
Similarly, you should also look at item quantities. A lot of times, when you’re displaying a price, you need to mention the number of units that people receive for that price. For example, 500GB of storage for $29, 75 credits for $39, a 3-month subscription for $49.
What’s the best way to frame those quantities and prices? Well, if your quantity is larger than the price, then you should put the quantity first and the price second. Say 75 credits for $39, instead of $39 for 75 credits. Similar to exposing people to any high numeral, that higher numerical quantity will anchor their comparison. Because the price is lower in magnitude, they’ll falsely infer that it’s a better deal.
Ideally, you should also consider avoiding 10-based quantities or rounded prices. You should make it difficult to calculate the price per unit. And there are two reasons for that. First, you reduce the pain of paying. If you sold fifty credits for fifty dollars, people know that they’re spending one dollar per credit. Whenever they spend a credit, they’ll see one dollar leaving their account. However, when you reduce peoples ability to make that calculation, they don’t see money leaving their hands.
The other reason why you should make it difficult to calculate the price per unit is because that difficulty will cause people to rely more on heuristics — i.e., quick decision rules. And because of that tendency, they’ll place more weight and importance on the first item within that sequence, and they’ll pay less attention to the second item. So if you’re placing the quantity first, people will focus on the benefits that they’re RECEIVING, rather than the COST that they’re paying.
Lastly, another technique involving the elements near your price is to incorporate two multiples of your price. If I give you a simple arithmetic problem, such as 2 x 6, you can usually generate the solution almost immediately. And that’s because we’ve stored those equations in our brain. Some researchers call them number facts.
More importantly, because of those associations, if you see the values of 2 and 6, you subconsciously activate the sum of 8 and the product of 12. So if you subsequently encounter either 8 or 12, you’ll be able to process those numbers more easily because those numbers will already be activated in your brain. And that heightened processing fluency feels good, and you’ll misattribute that pleasantness to the stimulus — in this case, 8 or 12.
Researchers have found that you can use that same principle to make a price more enticing. In one study, people evaluated a $24 pizza deal more favorably when an ad emphasized 4 small pizzas with 6 toppings. Even when an ad emphasized 4 small pizzas with unlimited toppings — which is an economically better deal — people were still more persuaded by the ad that contained the two multiples. So when displaying your price, try incorporating two multiples of that numerical value.
And those were some techniques to adjust the elements near your price. But if you want a deeper look at the research behind these principles— or if you want to lean more pricing techniques— you can click below to download my full PDF on the psychology of pricing.