How To Get Your Pricing Page Right— CXL Institute Digital Psychology & Persuasion Minidegree review

This article is part 11 of my on-going series reviewing & sharing what I’ve learned from CXL Institute’s Digital psychology and persuasion MiniDegree.

“Businesses too often forget the human element. Even though we buy all the time when it comes to selling, we forget the internal processes we go through before making a purchase”. Lenny Johnson ( Hubspot Academy)

Knowing the fundamentals of a useful pricing page is important because we, as humans are irrational beings when making purchases.

The pricing page is considered one of the essential parts of the website, think of it as “to be, or not to be”.

I don’t want to sound overly dramatic, but it’s a part where all of our effort towards building a trustful relationship with your customer finally leads to a sale. Few techniques help us make sense of how we can rationally determine and present a price to prospective customers.

The importance of contextualization

I think you would agree with me when I say that different consumers will pay vastly different prices for similar products. Though, our decisions are all coming from various contexts; we create the context in which we view it.

When we’re looking at the price, there are few ways we create context through which we view the price. One such method is comparisons. (comparing price to goods which provide similar kind of value).

85% of people do the research and compare your offer to alternatives, and if we control that comparison, we help people understand the value. If we don’t, people will compare it to other things which aren’t under our control.

There are two types of comparisons:

• Implicit Comparisons — the ones that we make ourselves (based on previous experiences, experiences from friends, general conventions, etc.)
• Explicit Comparisons — when a marketer shows specific comparisons of the business’s product/service with other products/services

And how to turn that to a high-converting pricing page?

There are numerous practical principles, and Erik Johnson from CXL Institute structured the most important questions to help you figure out what comparisons your customers are making:

Implicit Comparisons

• Who are the competitors to your product/service? What do they charge?
• Have these customers used similar products/services before? What did they pay?
• What price ranges do they usually pay for similar services/products?
• Are they price-sensitive( ex: walmart shoppers) or value sensitive(ex: whole foods shoppers)?
• What type of budget do they have products or services like yours?

Explicit Comparisons

• What other products/services are consumers choosing when choosing your product?
• What do they charge? How can you differentiate value?

For more information, check out an excellent book called, “The Psychology of Price”, which is pretty quick read

The levels of perceived benefits

The next thing that creates a context for pricing is called Perceived Benefits. Your Product’s or Service’s perceived benefits, both conscious and subconscious, define its value to your customers.

There are different levels of drivers that cause people to assess the value of a product:

1. Primary drivers — the features of the product.
2. Level 2 Drivers — the benefits your consumer derives from the features of the product.
3. Level 3 Drivers — the emotions or goals the service satisfies.
4. Basic Drives — the biological drives behind the feelings or goals.

There are four basic biological drives, and most of our purchases satisfy some need from one of these:

• Avoidance of pain
• Pleasure
• Time
• Money

Use these ideation prompts to find out the perceived benefits of your product or service:

List the drives that determine the perceived benefits of your product:

• Primary Drivers
• Level 2 Drivers
• Level 3 Drivers
• Basic Drivers

And aks your self, for each of those buying reasons, who are the competitors? What is their price spectrum?

Change Your Price’s Perception

The important thing is to understand the pricing context, and then you can think about how you assessed that value and try to know what the value is to customers.

From that point, you can alter the perception of your product and ultimately increase sales.

Use these behavioural tactics that are proven to work:

The Decoy Effect

The Decoy Effect is a common tactic used among marketers, it occurs when our preference for one of two options changes when a third similar but less attractive option is added.

If you want to design a good decoy, you should:

• Pick the product that you want to push forward.
• Introduce a decoy. The rule of thumb is that it should offer less for almost (or precisely) as much money. A very bad deal basically. The decoy is not supposed to sell, only serve to change the context

Price Anchoring

Anchoring occurs when we use an initial piece of information as a basis for our subsequent judgments. Initial anchors persist thanks to self-herding.

That’s why it’s crucial how we anchor customers in the first place.

The Center Stage Effect

It describes our innate tendency to choose options in the middle of a choice set. It works best if the differences between the options are simple and clearly communicated.

“Try offering three packages, and if there is something you want to sell, make it the middle option.”

Make sure that the other varieties are similar overall, with only a couple of distinctions. If they’re wildly different, the product you want to sell won’t be perceived as the middle option.

Optimize the payment process

Certain factors make people in the purchase process change their minds & abandon the whole process.

If you want to avoid situations where customers aren’t enjoying in the process of making a purchase, or are less satisfied with the product overall, keep in mind these factors:

• Opportunity cost
• Hassles of paying
• Methods of payments
• Timing of payment (upfront/instalments etc.)

The entire process of purchase should be optimized to make it seamless and satisfactory. (minimizing the pain of paying)

Use the following exercise(ideation prompts) to minimize the pain of paying:

• Is the value framed based on behavioural principles?
• How can the payment be made entirely hassle-free?
• Consider allowing for alternate methods of payments & the timing of payment

Thats it folks!