Setting the price of product is one of the biggest challenges for retailers. Many jewellers take the easy way by applying a standard mark-up based on the cost of the item. While this technique is simple, it can result in lost profits or slow sales. Proper pricing strategies can bring better margins and faster sell-through. Often it is not the price that drives sales but the numbers themselves that convince the customer to buy.
The first number counts the most
We are all familiar with “just under” pricing. $49 seems much less than $50 even though it is only a 1 dollar difference. In this case the first number 4 is motivator while the number 5 becomes a stopping point. Oddly enough, once you go past the stopping point the final number does not matter. Pricing the item at $52 or $55 or even $59 will sell just as easily as $50, if not better.
The power of 9
The number 9 works. If you offer the same item at three different prices: $34, $39, and $44 one might assume that the lowest price will sell the most. Yet it has been shown in countless studies the $39 will outsell the others by a wide margin. In fact the $34 price will sell the least. It seems too cheap compared to the other prices. One exception is using a comparative discount statement: “Regular price $48, sale price $40” will win over a straight price of $39. Of course “Reg. $48, now $39 will be even stronger.
Skip the punctuation
Let’s look at three ways of stating the price of a bracelet:
When we read the numbers out loud the first one is One thousand, nine hundred, ninety-nine dollars. The second one is the same but without the “dollars” which seems less as it does not remind us of money. The third one is spoken simply Nineteen ninety-nine with no reference to either money or the dreaded word “thousand” or even the word “hundred.” It is quick, simple and breaks down all reference to how much they are actually spending.
The best way to sell a $3000 ring is to place it next to a $10,000 ring. Just being near a higher priced item elevates the implied value of the lower priced item yet makes it appear to be a great bargain. Of course the same $3000 displayed with $300 rings makes the first one seem to be a super-premium product and is not likely to sell. But it will get those $300 rings move like crazy.
This is only the tip of the iceberg on the psychology of effective pricing. It is not easy and there are hundreds of studies and books that will go into more depth than is possible here. Try experimenting with changing even the tiniest details of your pricing to see what works best in your store.