You’ve probably experienced it before…
You create a product. You prepare to launch it. And then you reach the pricing decision.
Hmm...tougher than it seemed, right?
- How high should it be?
- Which numerals should you use?
- Should you offer a discounted rate?
- Do those things even matter?
Turns out, those questions DO matter. They matter a lot.
According to McKinsey executives, pricing has the highest impact on profitability:
“The fastest way for a company to realize its maximum profit is to get its pricing right...A 1% improvement in price, assuming no loss of volume, increases operating profit by 11.1%.” (Marn & Rosiello, pp. 84)
If pricing is so important, what can you do? How can you figure out the optimal price?
Well, you could use conjoint analysis. Ever look into it? It’s the cream-of-the-crop of pricing optimization. Any reputable conjoint study is at least $10,000. Pretty steep.
But luckily, there’s an easier way: psychology and numerical cognition.
At the end of the day, pricing is merely a perception. Nothing more. Nothing less.
Thanks to certain mechanisms of our brain and behavior, you can change people’s perception of your price. Essentially, you can trick their brain into perceiving your price to be lower.
In this 1-hour course, I explain the most powerful principles to make your price seem lower.
Originally, I compiled my findings into this pricing article. Over time, though, I kept finding new principles. This course explains the important takeaways from my original article, as well as new information that I've found since publishing that article.
Moving forward, I'll keep adding information to this course (instead of the article). Once you become a student, you'll be locked into that information forever.
What Will You Learn?
1. How Do We Evaluate Prices? – 2:48
Whenever we see a price, we consciously or nonconsciously determine whether it's high or low. In this video, I explain the mechanisms behind that cognitive process (and how you can apply those insights to improve your price).
2. Should Your Price Be Rounded or Precise? – 7:41
Which price is better: $38, $38.63, or $38.95? Each pricing format — rounded vs. precise — is better in different situations. This video explains why (and how to choose the best option for your price).
3. What's the Best Visual Size for Your Price? – 4:52
People equate visual size with numerical size. This video explains why (and how to apply that concept).
4. Where Should You Position Your Price? – 5:12
People equate visual positioning with numerical size. This video explains why (and how to apply that concept).
5. What are the Best Nearby Stimuli? – 7:52
When people view your price, the surrounding elements will be influencing their perception and evaluation. In this video, you'll learn how to place elements near your price to make it more appealing.
6. How to Design Your Pricing Package – 7:57
If you offer multiple pricing plans, how should you structure the value across plans? And how should you design the visual appearance of those plans? Or how can you influence people to choose the plan with the highest ROI?
7. How Can You Reduce the Pain of Paying? – 6:20
Every time we purchase something, we feel the "pain of paying." In this video, you'll learn how to reduce that pain so that you can motivate customers to follow through with a purchase.
8. How Should You Structure the Payment? – 4:42
Which payment method is most effective? When should you ask customers for the payment? And what's the best way to structure the payment process?
9. Which Products Should You Discount? – 1:49
Discounts are more effective for certain products. This video will explain why that's the case (and how to allocate your discounts accordingly).
10. Which Type of Promotion Should You Offer? – 4:05
Should you offer a monetary discount (e.g., 25% off) or should you offer a nonmonetary promotion (e.g., free bonus)?
11. How Large Should Your Discount Be? – 3:19
If your discount is too small, it won't be enticing enough. If your discount is too large, it'll negatively impact future purchases. This video will explain how to find the sweet spot.
12. How Should You Frame Your Discount? – 6:22
Should you offer a percentage discount (e.g., 35% off) or absolute discount (e.g., $30 off)? Which numerals should you choose? And how should you display your discount
I'm the author of Methods of Persuasion. When it comes to research, I'm like a kid in a candy store. My passion is studying the factors that influence our perception and behavior. I spend all day sifting through academic studies to compile interesting and practical applications.