If you could pack sheer psychological power into a single page of your website, which page would you want it to be?
I’d want it to be my pricing page.
The pricing page is where your customers make a decision. You want them to make the right decision. You want them to make the decision to buy that will give them the greatest value, and give you the maximum effect.
The following are five psychological hacks that will allow you to guide users exactly how you want them to go. Each of these psychological insights is founded upon research and real-world application. All you have to do is understand them and implement them.
1. Decoy Effect: Place A Third And Mispriced Option To Nudge Customers Toward The Preferred Purchase
The decoy effect occurs when customers are presented with a third option (a decoy) that causes them to choose the higher priced of the two original options.
Notice what happens in this video.
https://youtube.com/watch?v=wxXwsCmWakM+
Duke professor Joel Huber conducted an investigation into the decoy effect, also known as the asymmetric dominance effect. Huber asked subjects to choose between two restaurants. One was nearby but had a three-star rating. The second restaurant was farther away but was also much nicer — a five-star restaurant.
Subjects had difficulty choosing between the two until he introduced a third option. The third option was a four-star restaurant. Its drawback, however, was that it was very far away. It took longer to get to the four-star restaurant than it did to the five-star.
What did subjects do? They chose the five-star restaurant.
Next, Huber conducted the experiment with a different decoy. This time, the decoy was a two-star restaurant that was positioned a little closer than the five-star, but a little farther than the three-star. Based on this third option, people tended to choose the three-star restaurant.
Let’s say you have two main product choices, and you want to encourage users to select the more expensive one. How do you encourage them to choose it? Add a third option.
For this option, make sure that the value is significantly lower than the most expensive option, but the price is almost as high. Considering the middle option seems absurd. For just a few dollars more, the customer could have the highest option that provides far more value.
2. Center-Stage Effect: Put Your Best Option In The Middle. More People Will Choose It
In 2011, Dr. Paul Rodway conducted an experiment that seemed strange. He lined up 17 pictures, and asked subjects to choose the five that they preferred. Repeatedly, the subjects chose the middle pictures, even though Rodway’s experiment accounted for various differences such as the height of the subjects or their dislike for some artwork.
Just to make sure, Rodway conducted the experiment using identical socks. He lined up five socks vertically and asked subjects to choose the one they preferred. Again, they chose the one in the middle.
What was going on here? Rodway was uncovering the fact that people prefer the middle option, regardless of what type of person they are, and regardless of what items are available to choose from. This well-known preference for the middle option is called the “center stage effect.”
Why do people choose the middle option? In e-commerce, the issue is complicated by the fact that the middle option is normally the one that is priced in between the least and most expensive options.
A customer knows that she doesn’t want the “cheap” version, nor does she want to spend too much on the “luxury” version, so she opts for the middle version. Thus, position and pricing play a role.
However, that’s not always the case. Take an illustration from gas stations. Most fueling stations provide three options for gas. Premium gas costs considerably more than regular fuel. Very few cars actually need premium gas, and only 20 percent of consumers purchase such gas.
In order to coerce buyers to purchase premium gas, some pumps place this more expensive option in the middle.
Photo by Derek Jensen (Tyso) and used here under the Wikimedia Commons license.
If you have multiple options for a given product, put the option that you want to sell more of in the middle.
3. Framing Effect: Show The Value Of Pricing Options, Not Just The Price
The framing effect states that people respond in different ways to a choice, depending on how it is framed — as a loss or as a gain.
The word “frame” is a helpful insight as to how this cognitive bias affects us. If you put an ugly painting in a beautiful frame, the painting looks nicer. If you put a master painting in a crappy frame, the painting looks less beautiful. The frame makes all the difference.
So it is with the framing effect. Psychologists Daniel Kahneman and Amos Tversky were the first to conduct experiments in the framing effect.
Participants were presented with a hypothetical scenario in which 600 people are suffering from a deadly disease. Kahneman and Tversky developed a negative and positive framing of the treatment options:
Positive Framing – Treatment A saves 200 lives. It has a 33 percent chance of saving all 600 people, but a 66 percent possibility of saving no one.
Negative Framing – With treatment B, 400 people will die. There is a 33 percent chance that no one will die, and a 66 percent probability that everyone will die.
Obviously, both treatments are identical. They’re simply explained in different terms. How does this affect people’s choice?
Treatment A was chosen by 72 percent of participants when it was presented with positive framing (“saves 200 lives”) dropping to only 22 percent when the same choice was presented with negative framing (“400 people will die”).
Here are three other examples, from HighIQPro.
We are more likely to enjoy meat labeled 75 percent lean meat as opposed to 25 percent fat.
93 percent of Ph.D. students registered early when the framing was in terms of a penalty fee for late registration, with only 67 percent registering early when the framing was in terms of a discount for earlier registration.
More people will support an economic policy if the employment rate is emphasized than when the associated unemployment rate is highlighted.
When you use the framing effect on pricing, you want customers to see the value of their choice, not its potential loss or gain. When value becomes the primary point of their consideration, then pricing becomes less of a factor.
Grammarly uses this technique in its pricing page by pointing out value as a call-out to the annual subscription model.
The photography site 123rf.com indicates value and saving on its pricing page:
By showing customers how much they are saving, it frames the purchase in a more positive light, even though the cost itself is higher.
4. Bandwagon Effect: Point Out Which Option Is The Most Popular
If you want customers to choose a certain option, then tell them that it’s the most popular. According to the bandwagon effect, they are more likely to choose what others have chosen.
Why? It’s called groupthink, a “psychological phenomenon that occurs within a group of people, in which the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome.”
Groupthink is more popularly known as the bandwagon effect. If more people are doing it, then it must be the right way. People take their cues from others. They pick up on social cues, verbal cues, conversational cues, purchasing cues, driving cues, etc. Humans are programmed to think and behave in this way.
When you recognize this phenomenon and implement it into your pricing strategy, it might look like this:
Sharefaith, a digital subscription service, notes that its “Complete” program is the “Most Popular.” For customers who may not be familiar with the various features of each program, selecting the most popular choice make sense.
5. Base Rate Neglect: Make Your Prices Relatively Consistent With Each Other
Humans experience a cognitive bias known as base rate neglect. The psychological explanation for base rate neglect goes like this: “A base rate fallacy is committed when a person judges that an outcome will occur without considering prior knowledge of the probability that it will occur.”
When making decisions, people tend to focus on the facts that are before them, ignoring the facts that are generally true about that given situation.
Here’s an example of how it might be applied to pricing. Widgets normally cost $1. That’s a widely accepted fact. However, on your website, you sell a variety of widgets. One costs $9, one costs $13, and one costs $18. Individuals who see these prices are faced with the specific and immediately applicable information about those prices. They unintentionally ignore their knowledge that the going rate for widgets is $1.
If you want your pricing to appear fair, then you should allow each of the pricing options to be relatively the same. If there are vast differences between the pricing tiers, it can maladjust the customer’s base rate neglect bias, and cause him or her to think more broadly about the pricing.
Your goal is to keep your customer’s thinking on the price within a certain range — the range that you define.
As an example of this, consider a mechanic who provides oil changes. The shop has a variety of oil change services, each with a different price. A car owner can get an oil change for around $25 to $30. If this mechanic listed prices higher but kept them consistently high, then it may overcome customers’ general knowledge of oil change prices and keep them fixated upon the higher prices as normative.
Conclusion
I want to encourage you to consider the issue of pricing from a psychological perspective and not just a business perspective. Sure, you have to keep the business issues in mind.
However, most of your persuasive power will come from the psychological elements at play on your pricing page.
What is your preferred psychological hack for landing pages? Let us know in the comments.
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