Naturally, the first reason people start their own business is to make money. This can be the sale of various goods or services. However, it is not enough just to sell something, and you need to be able to optimize prices in order to compete in the market.
It seems to many beginners that this is a simple matter. They set prices at random or as they wish. Either they are too high, and no one buys their products, or they are too low, and they fail to recoup the capital invested in business development, and even more so to get some revenue.
Few business owners are aware of the existence of psychological pricing tactics that will not only increase your income but also your sales will skyrocket.
What is the Point of This Tactic?
Psychological pricing is about the ability to put prices on products that could influence people’s behavior and lead them to make a purchase.
Today, many companies, both large and small, are creating a whole department that would only be engaged in price optimization. Also, pricing is an integral part of the company’s marketing campaign.
One of these companies is Apple. In this company, pricing plays a significant role, both in creating a marketing strategy and in creating a product strategy. Incorporating pricing into these strategies allows your products to adapt to the market successfully.
How this Strategy Works at Apple
On average, Apple products cost about $1000. The products of this company have long established themselves in the market. The release of a new product on the market turns into a whole holiday, and people line up in order to become the first to buy a new device. In this regard, estimations indicate that soon the capitalization of the company will be more than $1 trillion and will lead to the fact that the company will become the first company in history with such a value.
How did they do it? How did they manage to rise to the top when their products are not one of the cheapest on the market, but quite the opposite?
The secret of the company lies in the fact that from the very beginning, they presented themselves as a company that sets rigid prices for their products. The company’s managers used one of the psychological tricks, which is that many people consider expensive goods to be of higher quality, and people are willing to pay for the quality.
Steve Jobs built his company on the fact that his company creates a limited line of products; when creating products, attention is focused on making a really high-quality product using high technologies; the main thing is profit over market share, and advertising campaigns fuel the interest of potential buyers and loyal customers for the release of a new product line.
After the death of Steve Jobs, the company continues to work in the same spirit. The company’s products are smartphones, laptops, music players, and smartwatches.
The main goal of the company is to sell quality phones to improve the user experience.
Lower Price Effect
The company puts prices like $1299.99 or $1099.99, but not $1300 or $1100. This makes a lot of sense. It seems that up to $ 1300 or $ 1100 is left one cent, but such prices psychologically affect people. They think the prices are closer to $1200 and $1000. This technique leads to amazing results.
What’s more, research shows that if a price has nines at the end, it means there is a discount on the item. Thus, they come to the conclusion that sales increase significantly.
The company’s customers will never see rounded-up prices for devices.
Therefore, if you want to launch a new line of products, then, by all means, try this method. Or try an experiment: put prices for products with nines at the end and next to them at a rounded up price. You will see the result immediately.
Comparative Pricing
This marketing method is that the price of one product is slightly higher than the price of another product.
Take the MacBook Air, for instance. The MacBook with an 11-inch screen is $100 cheaper than the same laptop, but with a 13-inch screen. Naturally, everyone understands that the price difference is as much as one hundred dollars, but the screen size is only 2 inches larger.
In this regard, sales of the first laptop will increase significantly. After all, no one wants to spend an extra $100 for 2 inches.
More Expensive means High-Quality
This is the whole pricing policy of Apple. A couple of years ago, we perceived our acquaintances who buy the products of this company as people who can afford the careless waste of money. Today, however, it is no longer perceived like that. Many began to understand that since the company has such prices, then their products are of high quality and worth it.
The main thing is to understand that you cannot just set sky-high prices and get high profits. Apple has established itself as a manufacturer of quality devices, and that is why their business is so thriving.
In order to learn and understand how to properly build revenue and price optimization, you can ask professionals for their help. They will help make sure that your business not only establishes the optimal winning pricing policy but they also teach your managers how to draw up smart marketing and pricing strategies.
Conclusion
You now have a better understanding of how psychological pricing works in business. It remains only to learn how to implement them correctly.