Five psychological tips to optimize your pricing page

Edited excerpt from 5 Psychological Hacks That Will Make Your Pricing Page Irresistible by Neil Patel:

1. Place a third and mispriced option to nudge customers toward the preferred purchase. This is the decoy effect, which occurs when customers are presented with a third option (a decoy) that causes them to choose the higher priced of the two original options. 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. Put your best option in the middle. People prefer the middle option, regardless of what type of person they are, and regardless of what items are available to choose from.

3. 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. By showing customers how much they are saving, you can frame a purchase in a more positive light, even though the cost itself is higher.

4. Point out which option is the most popular. People are more likely to choose what others have chosen. This is called groupthink, or the bandwagon effect. For customers who may not be familiar with the various features of each program, selecting the most popular choice make sense.

5. Make your prices relatively consistent with each other. When making decisions, people tend to focus on the facts before them, ignoring facts that are generally true about that given situation. This is known as the base rate fallacy. If you want your pricing to appear fair, then you should allow each of the pricing options to be relatively the same, so you don’t cause the customer 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.

Notes:
(1) Note the conflict between the decoy effect — introducing a pricing outlier to make the others look more attractive — and base rate neglect — ensuring your prices are consistent with each other. Which should take precedence?
(2) Here’s our pricing page for Seeking Alpha PRO. How should we improve it?

8 thoughts on “Five psychological tips to optimize your pricing page

  1. It seems to me that the 1st tip and the 5th tip are somewhat contradictory.How would you be able to misprice an option and keep prices consistent with each other at the same time? If they are not compatible, which is the stronger sell?

  2. Two comments:

    1. I’ve actually seen #1 play out with the Economist. They had three price levels:

    Online Only: $59
    Print Only: $125
    Print & Online: $125

    Conversions for print & online went through the roof because people felt they were getting a “free” $59 value by subscribing to both.

    2. Regarding Seeking Alpha Pro pricing, since pricing is really the ONLY difference between the three levels (i.e. there are no additional benefits other than price) I suggest making the comparison a bit straightforward.

    For example, $400 for a one-day seems really high compared to $800 quarterly. But that seems really low compared to the $2400 per year price.

    Instead, why not get rid of the one-day price (doesn’t seem realistic anyway) and then provide a month by month comparison instead? For example:

    $400 one month pass
    $800 three month pass ($266 per month)
    $2400 annual pass ($200 per month)

    From this, it’s easier to see that you save about 20% going to the annual pass. So in a way it plays to people feeling like they’re LOSING savings vs. paying an additional $1600.

      • I believe gee2789 is citing an example from (or used in) Predictably Irrational by Dan Ariely – I think it is the first or second chapter and, further, the book is great and applicable to this discussion.

  3. David, I’ve been a long-time reader of A Founder’s Notebook. I’ve been trimming my RSS feeds to focus my consumption but AFN has stayed on top because you consistently have the best links and insights!

    (2) I think you really have 2 pricing plans: Free and PRO. What I don’t get from the Pricing page is a quick, digestible sense of what PRO buys. Here is what I gathered:

    – Top Ideas
    – Ideas Deep Filter
    – First Look
    – Premium Articles
    – PRO Articles
    – Author Performance

    The Pricing page would benefit from a dive or preview of the best 3-4 benefits so the buyer can see what they’re getting. Maybe break each important one into its own section? I think Segment does a good job https://segment.com/tour/features. Make me salivate so that when I hit the bottom, I’m frantically looking for the Buy.

    gee2789 also hit the nail on the billing. $400 for one day seems like a huge commitment – one month is an easy buy. What does your data say for # people who buy the 1-month vs. 3-month vs. 12-month? Is it easier to simplify to month-to-month + annual?

    $400 monthly
    $2400 annual (save 50%)

    Could also be worth A/B testing “save 50%” vs. “$200 per month” to see which converts better. The simplified billing scheme gives you the chance to do something unexpectedly nice for an active monthly billing customer like offer them a 2 month credit if they convert to annual after their 11th month or a $75 credit they can gift someone in Premium Articles.

  4. It seems that in order to create the decoy effect (#1) one needs to add an expensive option (slightly higher price but much lower value). That would be in the middle – to gravitate people to the original expensive tier.
    But tip #2 suggest that people would choose the middle option.

    How would you reconcile the two tips?

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