Regular reader Carolyn Permentier writes:
Have you heard/read any studies/thoughts on pricing?
I mean, I know $97 is better, as is $67, apparently, so do we know that ending with the number 7 works better?
When we get up in the 200 thru 900… any rule there?
Thanks for your input!
Here’s my response:
There are all kinds of opinions.
I’m not big on ending in the number 7.
Just test it and see what works best.
Major psychological price thresholds are (generally speaking) $50, $100, $500, and $1,000.
So $49, $99, $499, and $999 are good starting price points.
Whether you end the price in a 5, 7, or 9 is mostly irrelevant, although worth testing.
Also worth noting: Price plays a huge role in conversion. Some say it is the most overlooked opportunity to boost conversion rates. It also happens to be one of the harder elements of a letter to test.
(I have not yet gotten to the level of price testing, although I’ve read quite a bit on the subject.)
If you have an opinion or test result you’d like to share, please chime in by leaving a comment. Thanks!
-Ryan M. Healy
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9 comments ↓
I was very interested in seeing the approaches you use to pricing in the US. Here in the UK we tend to use prices ending in 9 or, less frequently, 5 - and this applies at whatever price, from small amounts up to thousands of pounds. Does the number 7 have a particular psychological significance in the US? (In the UK it’s classed as a lucky number!)
Hi Ryan
Yes, interesting concept that I have also heard about elsewhere.
In fact if I remember correctly, I have read that most humans will pick number 7 as a random NUMBER between 1 - 10, similarly the default choice of COLOUR is RED, and a random THING most people will pick is a CHAIR.
So in theory if you are selling 7 RED CHAIRS FOR £7 (or $7) EACH, THEN YOU ARE LAUGHING ALL THE WAY TO THE BANK. It would be interesting to know if anyone has actually tested this.
Shuaib
Ryan,
The best I have been able to tell from my studies is that the whole “7″ thing began as a result of some testing Ted Nicholas did back in the 80’s or whereabouts. Maybe even as early as the 70’s.
The reason I know this is because of an old Ted Nicholas self-publishing seminar where he was announcing it to the attendees as a “new discovery” of his. Later on, Gary Halbert confirmed this, crediting Ted Nicholas with the discovery.
Then when the internet got popular, people started testing it and then all the copy-cats just joined in, not really knowing WHY they were doing it, just trying to emulate people they knew were successful.
Anyway, in my own tests, I’ve found it to be quite powerful.
–Greg
[...] Here is his response… Should Prices End in 7? [...]
I worked for Eric Marder Associates, a top New York marketing research firm, from 1978 to 2001.
We found at EMA that how prices ended DID make a difference. Prices ending in 3 were particularly bad.
However, we were usually dealing with cents, not dollars.
The key is that we tested. We did NOT rely on guesswork.
Greg - I’ve heard the same story about Ted Nicholas.
I also read a report that claimed to have done a number of split-tests on prices. The author concluded prices that use the number 7 are better than average and prices including the number 3 are much worse than average (doesn’t matter whether it starts or ends in 3, all tests were negative).
James Brausch has also published a post listing prices he says he has tested. He says the best numbers to use in prices are 0, 1, 3, and 5.
http://www.jamesbrausch.org/pricing-digits/
He also links to a PDF by Tim Gross about his results when he conducted a “pick a price” offer.
The flaw with letting your prospects “pick a price” is that it still doesn’t tell you which single price would have produced the most profit.
Anyway, it seems to me that price is worth testing… but that there are no hard and fast rules about which prices work best.
Ryan–Hi! This is interesting to me because we’re getting ready to release an info product, and we’ve been tossing around different ideas about pricing.
I think we’ll probably try a couple of different prices and see if we can tell which is most popular. I think you’re probably right that there aren’t any set rules for which pricing is best…
Hey everybody!
About this whole pricing thing, I read somewhere (I think it was in Freakonomics) that people pick unround prices not because they’re cheaper, but because it reflects a more exact price.
It’s not that $97.97 looks cheaper than $100 (even though it does), it’s because $97.97 looks like someone put a lot of time into picking that price.
And they’re not trying to round a couple more dollars out of you.
Wow, this got a lot of thoughtful
comments.
Cool.
Carolyn
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