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Discounting Your Discounts in Customers’ Minds
Posted By Bryan Eisenberg On July 30, 2007 @ 10:13 am In A/B Testing,Merchandising,Research,e-commerce,psychology | 9 Comments
People have used many of the same tactics for centuries to focus potential customers on the value they’d receive if they were to buy now. But here is a question for you:
Would your customers rather a product be marked down from $203 to $192, or would they prefer a markdown from $199 to $188?
Either way you slice it, they get an $11 price reduction. For you, it changes your final price from $188 to $192. Four dollars more for you sounds better and, believe it or not, customers perceive they’re getting a larger discount at the $192 price point. This is definitely an area that many more retailers need to test regularly.
A recent Journal of Consumer Research paper examined the notion that responses to pricing differs based on the right-hand digits in sale price figures . In fact, participants reacted as though low digits were farther apart than higher ones as well as they were about 20 percent more likely to actually buy.
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URL to article: http://www.grokdotcom.com/2007/07/30/discounting-your-discounts-in-customers-minds/
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 Image: http://www.grokdotcom.com/wp-content/uploads/Bryan/crazyeddiepriceslashed.jpg
 responses to pricing differs based on the right-hand digits in sale price figures: http://www.nytimes.com/2007/07/30/business/30drill.html?ex=1343448000&en=98a1694f3162130d&ei=5090&partner=rssuserland&emc=rss
 insane: http://www.youtube.com/watch?v=0jy8rPQ-qqk&NR=1
 Do something about it: http://www.grokdotcom.com/googlewebsiteoptimizer
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