Table of Contents
So you have a new product, but don’t know what to charge for it. Don’t worry, this happens to all of us.
In fact, I had this very same problem a few months ago when I was creating a software as a service (SaaS) company.
The good news is that after some time considering the topic and doing research, I discovered several pricing strategies that you can use to strategically boost the perceived value of your products.
Dimensional Pricing
One of the simplest ways to boost perceived value is to use a dimensional pricing strategy.
This involves offering different products at different prices in order to help customers understand the differences between them.
Dimensional pricing works well for products that you sell in multiple versions, such as clothing and electronics.
For example, you can offer a basic shirt for $30, an intermediate shirt with extra features for $80, and an upgraded model for $250.
This way, customers know that the more expensive shirts will last longer or be more feature-packed than the cheaper options.
Manipulate the perception of time
One of the most effective tactics to boost your perceived value is by manipulating the perception of time. How much would you pay for a pair of shoes that you can get at $40, but you know that it will be sold at $60 tomorrow?
Time can be your greatest friend or your cruelest enemy. It all depends on how you use it.
Price a product near the end of its life cycle, and time is an assassin. Price a product for a limited time, and time is on your side.
Here are 5 strategies that can help you leverage time to boost perceived value:
1. Launch time
The launch time of a product is one of the most important factors in determining value.
A launch can occur when the first item in a line is sold when the price changes or when the quantity available is limited. Launches create an air of exclusivity, giving customers an opportunity to gain prestige by being among the first to take advantage of the new offer.
Launch times are also important for retailers. Giving customers deadlines motivates them to purchase before they lose their chance forever.
This strategy works especially well with products that are difficult to obtain.
For example, suppose you want to sell tickets to an exclusive event such as a concert or conference; by creating a limited number of tickets at popular prices, you’ll be able to persuade even those who don’t really want to go to buy their way in just so they don’t miss out altogether.
2. Deadline time
Deadlines encourage sales by placing pressure on customers to act before the deadline.
A countdown clock adds urgency, and customers can perceive an increased value when they know they are getting something while it’s available at such a great price; especially if they see other people take advantage of it.
3. Seasonal time
Seasonal products—such as holiday decorations and swimsuits during summer—are more sought after during their respective seasons (or at least during non-season, off-peak times).
4. Clearance time
Clearance time is one of the easiest ways to boost perceived value and increase sales volume because it involves eliminating excess inventory by marking down prices on items that remain on store shelves after peak demand has passed.
The best part: Items aren’t marked down at random.
Clearance products are those that the retailer wants to move out of inventory quickly, typically because they’ve been in stock too long or were never popular in the first place.
5. Limited-time offers
Limited-time offers, also known as “limited-time promotions,” are great for increasing sales.
They offer an incentive that customers can’t refuse — the chance to get an item at a reduced price or some other benefit that’s only available for a limited time.
Doorbusters
Doorbusters are a great way to boost perceived value in your store.
The problem is that if you have a lot of inventory on hand, it can get very expensive to move it out the door.
Here are some tips on how to handle that:
1. Limit the Supply
When you’re using doorbuster pricing, make sure you only have a limited supply available.
If you’re selling laptops at $100 off, make sure people know that there is only one laptop left, and they need to click right now if they want to buy it.
2. Stock Up
If you don’t mind spending a little extra money, stock up on inventory before a sale so that when the sale starts you still have plenty of products available.
It’s also important to get your inventory ready as soon as possible. Waiting until the last minute will make it difficult to get everything set up and look good for the sale.
3. Add Value
Give customers something extra with their purchase to help justify the price drop.
Maybe it’s a case for their new laptop or a laptop bag for them to take home with them.
Even just giving customers something small like a thank you note with their receipt helps justify any price drop from their perspective.
Rounding Down
It is a common practice to display prices in round numbers with decimals such as $99.99 instead of $100.00 or $101.00.
This strategy is used by most online merchants and retailers as they are trying to entice the customers.
In fact, a recent study showed that almost 80% of consumers notice the prices that end in a 9 or a 0, while only 20% notice any other kind of number at the end of a price tag or in an advertisement.
What can you do to utilize this pricing strategy in your business?
Keep it simple
Try to avoid using cents when you set up your prices. For example, instead of writing “price” write “Price: $29.95”, or instead of writing “27.39” write “27.39$”.
Use this strategy for products that have prices ending with 9’s and 0’s only
For example, if you have a product priced at $10, then don’t use this strategy for it => just write “$10”.
Try to use this strategy with all sub-products
For example, if you have a product priced at $35 and its sub-product priced at $7, try the following:
- $49.99 – round down = $49
- $7.99 – round down = $7
Price protection policies
One of the easiest ways to increase your perceived value is to provide a guarantee on your product.
Price protection is when a store or online retailer offers to refund the difference if you find an item cheaper at another store within a certain time period after making your purchase.
Here is a list of tips on how retailers can boost their perceived value by using price protection policies:
- Use a scale that lets customers know how much they are saving (e.g., “You saved $100!”).
- If you offer price protection, highlight it online and in the store. Make sure customers know they can get that guarantee before they pay for the product.
- If you have price protection, include it in your advertising. Consider including it on your packaging.
- Offer price protection for both in-store and online purchases. This will help customers who have become accustomed to getting free shipping when making purchases online.”
Free shipping
Free shipping is a difficult thing to get right. It’s an easy trap to fall into: you offer free shipping to your customers, and then you’re stuck with huge shipping costs.
Truly free shipping, which covers the full cost of shipping for your customers, is incredibly difficult to achieve.
There are a lot of things that go into this – from how the product is packaged and delivered, to the way it’s stored until it’s ready to be shipped out, to any customizations that may have been made in preparation for shipment, and so on.
There are ways around these issues, however, that can help you offer free shipping while still maintaining your bottom line.
Here are 5 tips on how to do so:
1) Offer free shipping only on certain items
2) Make free shipping a limited time offer (LTO)
3) Offer free shipping only on orders over a certain dollar amount
4) Offer free shipping only if a certain quantity of product is purchased
5) Offer free shipping when there are no other promotions or bonuses available.
Guarantee
Since the beginning of time when humans exchange goods and services, they have also been exchanging guarantees.
Guarantees are a way that businesses boost perceived value by establishing trust with their customers.
Still, customers need to know that their money won’t be wasted.
Here are five tips you can use to offer customers an ironclad guarantee that their purchase is backed by your business:
Make it easy
Your guarantee should be easy to spot and easy to understand.
Place it clearly on your sales page with a prominent benefit statement, and make it big enough that customers can’t miss it.
Use both your sales page and package inserts or brochures to spell out its terms if necessary.
Tie it into other trust indicators
If a customer trusts your brand, they’re more likely to trust your guarantee.
Consider using logos from respected third-party companies (like Amazon or PayPal) as social proof that they can trust your business.
Make a clear and enticing promise
If you want to boost the perceived value of your products, you need to let people know what they’re getting in advance.
That means being clear about exactly what your product does, and making an offer that’s tempting enough that people will be excited about it.
Use the words “guaranteed” or “promise”
If you’re trying to boost the perceived value of your products, don’t just say things like, “We stand behind our products.” Say things like, “We stand behind our products with a 100% money-back guarantee.”
The word “guarantee” is more powerful than “promise,” and that power translates into boosting the perceived value of your products.
Use an unconditional guarantee
An unconditional guarantee means that customers can get their money back for any reason at all.
There is no catch or fine print. If you use an unconditional guarantee, you can get away with offering less than stellar customer service because people know they can return the product for any reason — even if there’s nothing wrong with it!
Discount for bulk
Bulk discount is one of the best ways to increase the perceived value of your product.
When you are offering a bulk discount on your products, customers perceive that they’re getting a big discount from the company.
This makes them feel like they are getting a good deal. It also makes them more likely to buy from you and refer their friends.
Discounts can help you attract customers, especially if you have a limited quantity of products available for sale.
Here are some examples of how you can use bulk discounts and coupons to attract more customers:
1. Create a sense of urgency
Offer a discount for bulk purchases to create the illusion that your products have a limited supply.
This strategy works well when you have a popular item and you want to take advantage of the interest in your product before it is sold out.
2. Clear out inventory
When you’re trying to get rid of old or unwanted inventory, offering bulk discounts will help get rid of it faster.
This can be done by offering a large discount or by offering free shipping with the purchase of a certain amount or number of items.
3. Create an incentive
If you’re selling products at a discount and giving away free products, such as free samples or free shipping, this can entice people to buy in bulk because they are getting more for their money than they would if they purchased items separately.
You could also sell individual items at different prices or offer additional promotional products with each bulk purchase.
Extra features
Extra features can make your product more attractive to buyers. In addition to saving them money, these options can help you differentiate your product from the competition.
Here are some ways to boost perceived value by adding extra features:
1. Supply a carrying case with the product
Clients will feel like they’re getting more for their money if they don’t have to buy an aftermarket case separately. A simple carrying case is a great way to add value.
2. Include an accessory that complements the product
If it doesn’t come with the product by default, clients will need to buy it separately — and will appreciate getting it at no additional cost.
3. Offer a service that extends the product’s lifetime
If you’re selling a lawnmower and offering a maintenance contract, include it with the purchase price of the mower, giving customers an incentive to keep using your brand.
Have an introductory price
The power of the introductory price is a concept that few e-commerce businesses take advantage of.
In fact, it’s one of the biggest flaws of online shopping: an item with a higher price is most likely perceived as being better than its cheaper counterpart.
Because of this, using an introductory price for your product is a good way to boost perceived value.
An introductory price fools customers into thinking that they are getting more for their money by actually giving them less.
However, the illusion is only effective if it comes with a catch such as “limited time” or “only until stock lasts”.
Here are some tips on how to boost perceived value by having an introductory price:
- Offer a discount for the first batch of customers who purchase your product. This works well for starters.
- Tie it up with an event. This can be a holiday or even just a normal weekend.
- Have it for a limited time only. If you have an offer for a limited time, this will make it seem more valuable and special. Make it flash.
- Make sure that the viewer sees this offer before they leave your website so that they will know that they are getting something special when they buy from you.
- Give them the impression that they are the first or one of few to get this offer. If you can make people feel like they are getting something exclusive then people will consider your offer to be more valuable than if everyone could take advantage of this particular deal.
- Run a countdown promotion. This works very well with digital products like plugins and themes but can be applied to almost anything else as well. Run a countdown timer on your sales page, counting down the days until the introductory price expires.
- Create a first-time buyer discount. If your product is designed to appeal to first-time buyers, create an incentive to buy it right now. If you’re selling a plugin or theme for WordPress, you could offer a discount if they buy it within their first month on your site.
Give non-perishable subscription options
How can you increase the perceived value of your product? One way is by offering something of value outside of the physical product itself.
A popular way to do that is with non-perishable subscriptions.
Non-perishable subscription options are a great way to give customers exactly what they want.
They’re also a fun way to show off your creative side and offer something different.
Here are some tips for how to make your next subscription option more valuable:
Give people what they’re looking for whenever possible
If they’re looking for three months of meditation training, give them three months of meditation training and save yourself on shipping costs, not to mention print and packaging costs.
Make it easy to unsubscribe at any time without penalty or hassle
It’s reasonable to charge a fee for cancellation before the subscription period has ended, but don’t be punitive when someone decides they no longer want your service or product after it’s been delivered for some period of time.
Consider whether you want to let people pay for their subscriptions on an ongoing basis, or if payments should be one-off.
You might not want to do the latter because you’ll lose potential repeat custom.
But if you have a product that doesn’t change much and people don’t need to be constantly reminded of it, then this is where it could work really well.
Could you offer subscriptions on a rolling basis?
For example, every day a new “roll” of the box is sent out with the latest items from that category inside? This would keep things feeling fresh for people and might encourage them to buy more than just one box, too.
It also means there’s less pressure because people aren’t waiting for the next box each month.
Offer free trial sizes
When you’re just starting to build your business, the last thing on your mind is how to boost perceived value. You probably have a lot of other things to think about.
However, free trial sizes are one of the best ways to increase customer satisfaction and increase sales.
Here are some tips on how to offer free trial sizes:
1. Start with a great product
It sounds obvious, but if you want to sell more, you need a product that customers love. If it’s good enough for them to buy again, offer a sample size at no charge as an incentive to try it out.
2. Offer samples in all sizes
Whether you’re selling cosmetics or vacuum cleaners, the best way to appeal to consumers is by offering different sizes and types of products for purchase.
This makes it easier for each customer to find something they like without having to take a gamble on their entire order.
3. Set up an easy way for your customers to order free samples
Even though this is supposed to be “free,” you still want people who don’t have much experience with your company or product line to be able to get samples easily and quickly so they can try it out before they commit themselves financially and emotionally by making a purchase.
4. Decide on an appropriate length for the trial period
A week, month, or three months is typical. If you’re offering a service, you’ll need to decide how many sessions a customer can enjoy during the free trial — three seems to be the norm for most types of services.
Final Thoughts
If your pricing is broken, you’re either not getting perceived value or losing revenue.
Take steps to fix the gap and you’ll see the positive results: purchase intent, return visits and lifetime value will all increase.
