pricing strategies boot camp session 1

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PRICING TECHNIQUES BOOT CAMP

Copyright Spring into SalesSession One

Session One

Introduction to Pricing Techniques Why display pricing What happens if I remove the $sign Rounding prices How can I increase sales tomorrow Hot Seat

Introduction

Neuromarketing Science of Shopping

Pricing

Show your prices

Women won’t ask Men get mad

Do $ signs make us spend less? Cornell University StudyChicken Pie $10.00Chicken Pie 10.00Chicken Pie Ten dollars

Relationship between money imagery and selfishness

Session One

Introduction to Pricing Techniques Why display pricing What happens if I remove the $sign Rounding prices How can I increase sales tomorrow Hot Seat

What happens with rounded prices

Notepad priced at $20.00

Perceived value might be

$20$19

Notepad priced at $19.95

Perceived value might be

$19.75$19.50

What about high priced products University of Florida Study 5 year study, Florida, Alachua County $500,000 $494,500

Sold more quickly Closer to original asking price

How we weigh prices Mental measuring stick Based on initial price Increments We want a fair deal

Session One

Introduction to Pricing Techniques Why display pricing What happens if I remove the $sign Rounding prices How can I increase sales tomorrow Hot Seat

Rounding or Precision Pricing

$29.99, $30.00 or $29.88

Schindler & Kibarian Study, University of Pennsylvania

Effect of Odd Pricing

Catalogue One

Was $30 now $24.00

Catalogue Two

Was $30 now $23.99

Catalogue Three

Was $30 now $23.88

3x30,000 = 90,000 catalogues. 6 month study.

Number of Purchasers per catalogue

Surprised?

More people made purchases

0.88 0.99 0890900910920930940950960970980

923

968

921

Purchases

Spend per person per catalogue

Surprised?

Higher spend on the $.99 ending prices

0.88 0.99 0$76.00

$77.00

$78.00

$79.00

$80.00

$81.00

$82.00

$77.68

$80.91

$78.75

$ spend per person

Sales revenue per catalogue

Surprised?

Better revenues

0.88 0.99 0$68,000

$70,000

$72,000

$74,000

$76,000

$78,000

$80,000

$71,699

$78,317

$72,529

$ Sales volume

What does this all mean? 5.1% increase in number of people who

purchased 2.7% increase in $ amount 8% increase in total revenues

$2,000 per order/event10 orders/events per year$20,000 @ year = $1600 increase

Why is this happening? Underestimation Mechanism

Process left to right $29.99 = $29 $29.99 = $20

Association Mechanism $x.99 = sale = bargain?

Session One

Introduction to Pricing Techniques Why display pricing What happens if I remove the $sign Rounding prices How can I increase sales tomorrow Hot Seat

HOT SEAT

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