Online it's more complicated than "What the traffic will bear" but pricing follows the same arbitrary rules of offline business.
For example, the owner of a curio shop near Hearst Castle in California bought some Japanese lead glass ashtrays and put out a dozen at $10.95. All sold in one day.
The next dozen were priced at $21.95. and also sold in one day. Then he hiked the price to $45 and sold six in a single day. Ultimately only one ashtray remained. The shopkeeper tacked a $100 price tag with a note "last of its kind". It was gone in an hour.
Trial and error pricing is exciting and may work well with unique merchandise, but if you're in a competitive industry, selling products or services or both, take your cues from solid research data.
A recent survey revealed that two-thirds of all advertised prices between one cent and five dollars are odd. The number most often used as the last one is nine, followed by five. How often do you see a price such as $4.83? Numbers one, three, and seven are rarely used. Multiple unit pricing works well, like 5 for $3.00. Three ads for $15, six for $25.
Odd prices work well, except in high end products and services where even prices suggest superior quality. For items under a dollar, nine works best. Five also works. Above $10, nine should be avoided. Endings of $.25, .50 and .75 work better and .95 works best. Over $25 a dollar or two below the even price is most popular—28 or 29 instead of 30. You must convey the image that you're pricing fairly. Most marketing programs are priced at $47.95 with special offers at $38.00.
Above 1000 whole numbers work best. Imagine buying a $9,999 diamond ring. Always avoid the $.00 ending over a thousand. Too many zeroes. Even billionaires flinch at that
Percentage off does not work well as a promotional tool because the consumer may not know what the original price is. 50% off what? Or they may not know how to figure 30% quickly without a calculator. It's better to offer ten dollars off the regular price of 39.95 until midnight tonight!
We hear a lot about "perceived value." If we put an amount in parentheses of a bonus we are giving the customer when he buys, such as an ebook ($167). We are boosting the perceived value of the deal. Supposedly. Personally, I think this is a bit overdone. It strains the credulity. How many free ebooks can you download and read anyway?
A few years ago people used to sell space on their websites for advertising as if space were limited like it is in a magazine or newspaper. I sold a link for $50 before I knew what a link was. Chagrined, I sent the money back.
Still, we can't build and maintain a business unless we charge enough to make a healthy profit, so why not use a little exaggeration on the value of our give-aways?
Evy McNeilly, editor SELLING SAVVY. . .ONLINE