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Marketing Psychology What is consumer behaviour? For secret psychological tips and tricks to get your buyers to take action and buy your products.

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Unread 04-17-2012, 07:21 PM   #1
seeeker
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Default Pricing theory question

I offer an online service revolving generally around web design in a niche market. It's a new business, I have done no marketing and had no clients yet. So I have no quantifiable data - I'm just getting started. I offer two package levels, a "basic" and an "extended".

The basic package is a bit bare bones, but complete nonetheless (I know that sounds vague). It offers a service but the end product (a website) has limited content.

The extended package offers a more complete website: a lot more formatted content, some custom design, a richer, fuller end product. I want customers to select this option.

I have researched the competition and I believe I'm in the right ballpark, but my question revolves around specifically how to price the packages in relation to each other.

Let's say the basic package is offered at (hypothetical numbers here) $100.

How would I price the extended package? So far I have doubled it then subtracted a certain percent. So let's say, $175. My hunch is that this tells the customer ("Ok, it's not twice the cost, so I might as well spend the extra because you get a much richer end product.")

I want people to buy the extended package because it doesn't represent a whole lot more work for me, it gives them a better end product, and my revenue is greater.

I'm not a business person, I have no marketing experience. So I hope this makes sense, with enough detail.

Trying to learning about pricing theory. I have read about psychological pricing of ending the price in 9 or 5 - so I'm not talking about that.

Specifically about how to price two related products to entice the greater purchase.

Suggestions for further reading are also helpful, thank you.
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Unread 04-18-2012, 05:22 AM   #2
Jim Gillum
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Re: pricing...a study a few years back showed that pricing ending in "7" had 30% more closings....

Last edited by Jim Gillum; 04-22-2012 at 02:42 PM..

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Unread 04-18-2012, 06:31 AM   #3
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Gee thanks. Good for you.
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Unread 04-22-2012, 02:17 PM   #4
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Actually what's most important is to test test. What works for others may not work for you. Some niches may convert better at 7 or 8 or 9 or just a simple flat 0.
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Unread 05-06-2012, 02:48 PM   #5
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If the extended package offers a lot more then the pricing should reflect that, not so much that it should be a lot more, but the basic package should be lower than you'd normally think.

If it was to be $100 then charge between $67 or $77 instead, it all depends on what it is, then make the extended package $197. The difference in price will reflect the difference in quality.

If you don't charge much more for the extended it may look like it's not much better and most people will go for the basic.

That's the way I'd do it, but again, it's all dependent on exactly what the product is.

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Unread 05-10-2012, 05:03 AM   #6
Sophia Myles
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Quote:
Originally Posted by hexxes View Post
Actually what's most important is to test test. What works for others may not work for you. Some niches may convert better at 7 or 8 or 9 or just a simple flat 0.
I agree, testing is always an important step in marketing, and one that always bring results. I think a full version should has a price that can tell people "I'm much better than the basic one", why not just tell how much it really worth, and then offer some discount (as you are new in the market)? That may help you build a professional image as well as bring in some customers who'd love to have a trial with your discounts.
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Unread 07-18-2012, 05:59 PM   #7
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The members telling you to test the pricing are right. Since this seems to be a small company with just a few employees you have a lot of flexibility on pricing. You have no clients and low overhead.

I would figure your costs, add 20% for unseen issues and then add a margin that you feel comfortable making. Because of the low overhead, you may be able to lure some clients by offering a better value than your competition. Then start raising your prices as you get more traction and more work.

But remember, if you get a client because of the lowest price, you will lose them for a lower price. "Bargain shoppers" are no typically that loyal to vendors.

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