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🗓️ Tuesday, 6^th Aug 2024

Hi, and welcome back to Growth Espresso - your one-stop destination for everything e-com.

Are you always on the lookout for the best deals? Do you find yourself scrolling through countless products, comparing prices, and weighing the pros and cons?

You’re definitely not alone! It’s only natural to want the most bang for your buck, and we’re often willing to spend a good chunk of time hunting for the best value.

When buying pretty much anything, two main factors come into play: perceived benefits and perceived cost. Ideally, great products and promotions make you feel like you’re getting more value than what you’re paying for.

Most brands try to achieve this through fancy branding, eye-catching designs, and other traditional marketing tactics. But what if there’s another way to make your customers feel like they’re getting an amazing deal?

Enter pricing psychology—a sneaky little trick that helps you tip the cost-benefit scale in your favor.

In today’s edition post, we’ll dive into the fascinating world of pricing psychology and show you how to use it to your advantage.

Let’s dive in!

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Mastering the Art of Pricing Psychology

Pricing psychology is all about using strategic pricing tactics to influence the perceived cost and value of a product, which can significantly impact your campaigns’ success.

One classic example is the $9.99 price tag instead of $10.00. Our brains focus on the first number, making $9.99 seem like a better deal.

But there are other powerful tactics in pricing psychology, like anchoring and innumeracy.

Anchoring sets price expectations higher, making discounts more appealing. For instance, showing a strikethrough price next to a new, lower price, or stating “normally $100, now only $20,” makes the current price seem like a steal.

Innumeracy moves away from pure math, presenting deals more enticingly. “Buy one, get one free” feels like double the value compared to “buy two at 50% off,” even though both offers are the same. Getting something “free” tricks our minds into perceiving a better deal.

By understanding and applying these tactics, you can make your pricing strategies more effective and appealing to consumers.

Ad Examples That Demonstrate the Power of Pricing Psychology

By using these and other pricing tactics strategically, you can boost the perceived value/cost ratio of your products and services. Now, let’s take a look at some real-world examples of pricing psychology in action!

1. Reeling ’em in with a Sale

Nobody likes paying full price, so consumers are always on the hunt for a great deal. That’s why this “3 for 2” sales ad example is so effective at grabbing attention and enticing clicks. Even though it’s essentially a 30% discount on three products, it encourages customers to buy more, making it seem like a better deal.

The wording is also clever—it mentions the sale is only on selected brands, sparking curiosity. Viewers won’t know what’s on sale until they click through, which drives engagement.

Our data shows that “X for Y” offers are the second most effective type of sale, performing 35% better than the average sale ad.

2. A Mouthwatering Good Deal

Who doesn’t love a hot slice of pizza? This Domino’s ad highlights a 2-for-1 deal, enticing hungry viewers to order while saving money.

Whether you’re offering a two-for-one sale or a 50% discount, people usually prefer the two-for-one deal because they feel like they’re getting something for free.

3. Trendy, Not Spendy

Color matching in ads—product, headline, and background colors—creates a visually appealing design. Less is more when it comes to colors; just 2-3 contrasting colors can be very effective.

This ad also uses price anchoring, showing a strikethrough price to make users feel they’re getting a $29.95 value for a fraction of the price. The catchy headline grabs attention, then presents the actual offer.

4. Pricing Psychology, Italian Style

A clean, simple design with shades of white and a 3D effect makes the Maccheroni pasta box stand out. The playful touch of spilled maccheroni shows the pasta type clearly.

The special offer sign below the box attracts attention to the reduced price. Prices ending in odd numbers (like $1.97) are perceived as cheaper, attracting price-conscious shoppers.

5. Rock ’em, Sock ’em, and Run ’em In

This Boxing Day ad keeps it simple with a side view of the product and detailed information underneath.

Not only does it detail the specific product, but it also highlights the original price and the Boxing Day sales price at the bottom. The sales price changes to a deep purple, drawing more attention—a tactic called Price Appearance.

This ad excels in its simplicity, providing all the necessary information!

6. Say Yes to the Dress

A red floral pattern dress with a 58% off arrow pointing directly at it grabs attention. Multiple images showcase the dress, and the ad does the math, showing both the original and discounted prices.

7. Clear, Straightforward Messaging

GoPro’s “Price Tag” ad uses color and negative space effectively. The product placement overlaps with the radically discounted price, centering attention on the deal with no noise.

8. Using AIDA to Improve Your Ads

The AIDA model (Attention, Interest, Desire, Action) works here by grabbing attention with color, sparking interest with the word ‘GRATIS’ (free of charge), and making the vibrant background more eye-catching.

Based on our analysis, this advertiser has made the perfect background color choice. Vibrant saturation is naturally more eye-catching and is correlated with a 19% higher performance than muted colors.

9. Make Your Offer Clear

This ad uses bright colors to grab attention and a clear layout to display the tablet. The bold “$400” text makes viewers feel they could save that much, even though it’s the maximum discount, not the standard saving.

Leveraging the Secret Powers of Pricing Psychology

Adding basic pricing tactics to your advertising can drastically change the perceived value of your offer. However, psychological pricing isn’t a one-size-fits-all solution.

Use these tactics to complement a strong value proposition, keeping branding, messaging, and offer value in mind. Consider your target audience and advertising objectives. For value-driven shoppers, pricing psychology can make a huge difference, but for luxury products, too much discounting can hurt brand perception.

With careful consideration and a bit of pricing psychology, you can create a winning strategy to drive your ad revenue to new heights.