when should you reveal price?

When Should You Reveal Price? The 3 principles of presenting price and how they helped one company generate a 97% increase in conversion

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TODAY’S PRESENTER

Dr. Flint McGlaughlin – Managing Director, MECLABS Flint McGlaughlin is the Managing Director of MECLABS Group. The organization has partnered with key market leaders including The New York Times, Microsoft Corporation, and Reuters Group. Dr. McGlaughlin also serves as the Director of Enterprise Research at the Transforming Business Institute, University of Cambridge (UK), as the Chairman of the Board of Governors for St. Stephen’s University, and as a Trustee for Westminster Theological Centre. Dr. McGlaughlin originally studied Philosophy and Theology at the University of London’s Specialist Jesuit College. Today, his primary research is focused on enterprise as transformative agent. His work has won multiple awards and has been quoted in more than 13,000 online and offline sources.

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EXPERIMENT: BACKGROUND

Background: A large sports entertainment provider sought to increase conversion on it’s main landing page. Goal: To increase league start-ups Research Question: Which page will generate the most league start-ups? Test Design: A/B Single factor split

Experiment ID: TP1645 Record Location: MECLABS Research Library Research Partner: [Protected]

Research Notes:

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EXPERIMENT: CONTROL

• The original version of

the page emphasized the value proposition of the app software itself.

• We wanted to test emphasizing different aspects of the value proposition as well as the impact of deemphasizing the price.

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EXPERIMENT: TREATMENT #1

• For this test, we were limited to changing only the banner section of this page, and our language was constrained.

• In the first treatment, we shifted the focus of the message from the app itself to the value of the free trial.

• We also tested the effect of de-emphasizing the price in the eye-path.

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EXPERIMENT: TREATMENT #2

• In treatment 2, we shifted the focus of the copy and images to emphasize the value of the company.

• However, the most radical change is that we completely removed the price from this page altogether.

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EXPERIMENT: RESULTS

Web Page Free Trial Week 1

Free Trial Week 2

End of Free Trial


Free Trial Week 2

End of Free Trial


Free Trial Week 2

End of Free Trial

Control

Treatment 1

Treatment 2

• THE CONTROL strongly emphasized the price at the beginning of the process. TREATMENT 1 revealed, but de-emphasized the price on the first page. It was not until the second week of the free trial that price was emphasized. TREATMENT 2 did not reveal the price at all until the second week of the free trial.

The Presentation of Price

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Subscription Path League Start Rate Rel. diff Statistical

Significance

Control 5.01% - -

Treatment #1 9.25% 84.6%

Treatment #2 9.85% 96.6%

97% Increase in League Starts Treatment increased conversion rate by 96.6%

99%

EXPERIMENT: RESULTS

99%

What You Need to Understand: In this case, there was a strong relationship between the moment the price was revealed and the conversion rates. When price was de-emphasized early in the process, we received a greater response from prospects.

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EXPERIMENT: RESULTS

• Price is a complex, yet vital

aspect of offer-response optimization.

• Often, we are leaving significant revenue on the table because we have not tested and optimized the presentation of price.

How should price be presented? ?

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Today, we are going to walk through the three most important principles that a marketer should know when

presenting the price of an offer.

TODAY’S FOCUS

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PRINCIPLE #1: Price Does Not Equal Cost

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Key Principles

PRICE DOES NOT EQUAL COST

1. It is essential that marketers do not confuse price with cost. Price may be the least part of the cost.

2. Cost does not exist on the web page (or in a product’s price), cost exists in the mind of the customer. Many elements other than price can contribute to cost.

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Price + (X) + (Y) + (Z)… = Cost

Confusion Effort Fear

Psychological Costs

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OTHER CONTRIBUTORS TO COST Other contributors to cost:

Confusion

• Headline “Go Pro” is disorienting. What does it mean?

• Competing information makes it confusing to know what is important.

Effort

• The difficulty in reading the white on black text.

• Layout presents multiple calls-to-actions

Fear

• Is this software simple or will it difficult to understand?

• Does it have all the functionality I want?

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Key Principles


1. It is essential that marketers do not confuse price with cost. Price may be the least part of the cost.

2. Cost does not exist on the web page (or in a product’s price), cost exists in the mind of the customer. Many elements other than price can contribute to cost.

3. The goal of the marketer is to minimize (not eliminate) as much non-price specific costs as possible.

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Visit: MECLABS.com/LPOsample

MECABS Landing Page Optimization Course

SPECIAL RESOURCE FOR LIVE ATTENDEES ONLY

• Clinic attendees save 30% ($200)

• Exclusive discount code: 451-OC-3006 • Available for one week only

• View the first session for free

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PRINCIPLE #2: Price can be either P+ or P-

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PRICE CAN BE A EITHER P+ OR P-

Perceived Positive

Perceived Negative

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Background: Well-known B2C company offering an online encyclopedia subscription product

Goal: To get visitors to sign up for a free trial

Primary research question: Which landing page will have the highest subscription rate?

Test Design: A/B split test (variable cluster)

Experiment ID: Encyclopedia Britannica Location: MarketingExperiments Research Library

Research Notes:


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EXPERIMENT: CONTROL

Let’s look at how price is presented in the control…

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EXPERIMENT: CONTROL

• On the original landing page price is NOT presented until they decide to click through to the next step.

Top of Page

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EXPERIMENT: CONTROL

• On the original landing page price is NOT presented until they decide to click through to the next step.

Bottom of Page

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EXPERIMENT: CONTROL Page #2

• Price is presented in the cart. It is presented in a standard way and is mostly perceived as a negative. Is there a way to present the price so that it is perceived as a strong positive?

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EXPERIMENT: TREATMENT

Let’s look at how price is presented in the treatment…

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EXPERIMENT: TREATMENT

• Top of the landing page has been optimized to better express the value of the offer. By intensifying the value, our researchers hypothesized that we could present the price earlier in the process.

Top of Page

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EXPERIMENT: TREATMENT Bottom of Page

• The price has been moved from the second page to the first page, and it is presented in such a way that it is actually a perceived value. It states that this price enables you to “Save $1,251.60 off the print [version]”

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EXPERIMENT: SIDE-BY-SIDE

Control – Page #2

Treatment – Page #1

• Price revealed negatively on the second page

• Price revealed positively on the first page

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Versions CR Rel. diff Stat. Conf

Control 1.00% - -

Treatment 2.03% 103%

103% Increase in Conversion The Treatment generated 103% more free trial sign ups than the control

What you need to understand: By intensifying the perceived value of not only the offer, but even its price, the treatment was able to double the conversion on the page.

EXPERIMENT: RESULTS

95%

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Not this

But this

NOT THIS, BUT THIS

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When Should You Reveal Price? ?

KEY QUESTION

Sooner? Later?

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WHEN SHOULD YOU REVEAL PRICE?

Key Principles

1. In most cases, price should be presented only when the value is established and the fulcrum is fully weighted on the value side. It is essential that the value must be conceptualized, imagined, and fully appreciated prior to revealing the price.

2. However, our research also suggests that in some cases delaying the presentation of price can actually create anxiety – particularly in industries where people expect to see the price up front. People fear they are being manipulated.

3. The key is to understand how price impacts the variables in the thought sequence.

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PRINCIPLE #3: Price Must be Tested

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Experiment ID: (Protected) Location: MECLABS Research Library Test Protocol Number: TP1154

Background: National Alert Registry was a subscription service that offered alerts when convicted sexual offenders moved into your neighborhood or nearby. Goal: To increase the total revenue generated by the subscription Primary Research Question: Which price point will generate the highest revenue? Approach: A/B split test

Research Notes:

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The only change on the page was the price of the activation fee. The three price points tested were: • $10.00 • $12.50 • $14.95

EXPERIMENT: TREATMENTS Control Price-Point: $10

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Which price point will generate the most revenue? ?

Price Point Total Sales Total Revenue

$10.00 ? ? $12.50 ? ? $14.95 ? ?

TEST YOUR MARKETING INTUITION

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$10.00 156 $1,560.00 $12.50 94 $1,175.00 $14.95 74 $1,106.30

EXPERIMENT: RESULTS

33% Increase in Revenue with the Cheapest Price The control price-point of $10 generated at least 33% more revenue.

What you need to understand: The less expensive price generated 33% more revenue than the next expensive price and 41% more revenue than the highest price. Essentially, the more expensive we made the product, the less revenue we generated.

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$10.00 156 $1,560.00 $12.50 94 $1,175.00 $14.95 74 $1,106.30

EXPERIMENT: RESULTS (A CLOSER LOOK)

33% Increase in Revenue with the Cheapest Price The control price-point of $10 generated at least 33% more revenue.

What you need to understand: The less expensive price generated 33% more revenue than the next expensive price and 41% more revenue than the highest price. Essentially, the more expensive we made the product, the less revenue we generated.

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EXPERIMENT: RESULTS (A CLOSER LOOK) Control Price-Point: $10

• The results are even more interesting as we factor in the add-on option to subscribe to the monthly reporting service.

• More people were likely to subscribe to the add-on option at the $10 price point, leading to an even greater revenue increase – exactly $247,233.94 per year.

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Price Point Marketing Cost Total Revenue ROI

$10.00 $808.02 $1,560.00 93.06%

$12.50 $808.02 $1,175.00 45.42%

$14.95 $808.02 $1,106.30 36.91%

EXPERIMENT: RESULTS (ROI ANALYSIS)

93% Return on Investment The control price-point of $10 generated a 93% ROI

What you need to understand: The less expensive price generated more than double the amount of ROI for the marketing campaign.

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Key Principles

1. Presenting price is part science and part alchemy.

2. Company value is generated by maximizing the gap between your price to deliver and the customer’s willingness to pay.

3. You cannot know that you have the right price until you have run an experiment where you have charged too much (and thus discovered the top threshold of “willingness to pay”).

Price Must be Tested

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Amou

nt S

old

Price

THE PRICE FRONTIER GRAPH

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SUMMARY

PRINCIPLE #3: Price Must be Tested

PRINCIPLE #2: Price can be either P+ or P-

PRINCIPLE #1: Price Does Not Equal Cost It is essential that marketers do not confuse price with cost. Cost does not exist on the web page, cost exists in the mind of the customer.

Price should be presented only when the value is established and the fulcrum is fully weighted on the value side. It is essential that the value must be conceptualized, imagined, and fully appreciated prior to revealing the price.

Presenting price is part science and part alchemy. You cannot know that you have the right price until you have run an experiment where you have charged too much.

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when should you reveal price?

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