Have you ever wondered how simply presenting or visualizing a price can make a consumer perceive a product as cheaper or more expensive, or of better or worse quality? In other words, it's not just the price itself, but also how it's visually presented.
Pricing and price visualisation play a crucial role in influencing consumer choices through the intricate web of psychology. Understanding psychological pricing can give you an edge in marketing and pricing strategy. It's about understanding the psychology of consumers to make your offerings irresistible, rather than just the numbers on a price tag.
Understanding cognitive association will help you to take your product or brand from good to irresistible. As we continue our series on five scientifically supported principles, in this part 2, we’ll discuss cognitive association in pricing and how it can drive fascinating buying decisions.
What is cognitive association?
Cognitive association – in a business or marketing context - refers to the words and feelings that people associate with your brand(s) based on their experiences, e.g. what are spontaneous feelings or brand associations that bubble up when seeing your logo, hearing your company name or visiting your store. These associations can be positive or negative and are not chosen by you, but they are the result of your strategic choices and investments throughout the customer's journey.
So, it is crucial to understand these associations to reach and attract potential buyers and shape how customers think and talk about your brand. For businesses, understanding these subtle undercurrents that shape brand and pricing perceptions is an essential tool that can determine the success or failure of a product.
Pricing your products is a delicate art as well. Numbers have the potential to evoke feelings, shape beliefs, and steer decisions. Each price you display can trigger a sequence of thoughts, creating a perception even before a customer purchases or tests your product. In the realm of psychology, there is a strong belief that price is a marker of quality: 'You get what you pay for.'
Smart businesses grasp this concept, using price not just as a numerical value, but as a symbol of value or prestige, often regardless of actual costs. Hence, setting your price correctly and aligning it with your brand perception is crucial.
But how can one communicate a price that is as appealing as possible, making the product even more irresistible to buy and thereby boosting sales?
Below are some commonly used pricing communication techniques based on the cognitive association theory. They will make you look at price tags completely differently from now on, I promise.
- Research reveals that omitting decimal points in high prices creates a perception of lower costs. A price without a decimal point appears smaller, downplaying the numerical size and emphasizing the link between visual space and magnitude of the price.
- Visual cues also play a significant role in shaping price perception. Font size for example subconsciously influences how consumers perceive price tags, with larger fonts implying higher costs and smaller fonts suggesting affordability.
- Descriptive terms, stressing the aspect of being low (e.g. "low friction") can create an impression of lower prices, leveraging the association between text and pricing perception.
- Additionally, the presence of currency signs can evoke the discomfort of spending money, potentially deterring purchases.
- Enhancing the visual presentation of discounted prices creates a greater perceived value difference. Effectively highlighting price reductions communicates significant savings to consumers. Taking it a step further, we are also revamping the visualization of the 'for-price' to have an even bigger impact.
- Tailoring discount formats based on product price can enhance perceived value. For items priced under €100, using percentages may maximize the deal's appeal. On the other hand, using absolute values for higher-priced items might be more effective. This is because of our cognitive association. For example, people tend to associate 10% with a "good deal" more than €7, and they may perceive €35 as a "good deal" more than 10%.
And to conclude this list of revenue-maximizing visual communication techniques, here's another inspiring social experiment that was conducted a long time ago in an American Office environment.
Office employees participated in an experiment involving payment for tea/coffee using an "honesty box" system. A list of suggested prices was displayed, along with a strategically placed poster above the price list. The poster, featuring either flowers or eyes looking directly at the observer, was a vital component of the experiment. The impact of visual cues on honesty box contributions was profound. Over ten weeks, the experiment revealed a significant contribution difference based on the visual cues. When the poster displayed eyes looking at the observer, contributions were nearly three times higher than when it displayed flowers. This suggests the powerful influence of visual cues on human behaviour. “You’re being watched…”
So, next time think about which visuals you can display alongside your products to encourage customers to contact you, make a purchase, or spend more.
Bottom line
How you present pricing in your creative content and messages, including percentage discounts, percentage ranges, and actual price reductions can help you optimise your pricing strategy.
Price visualisation testing is a helpful tool to try out different hypotheses, as it will serve as a framework to find out how to most effectively portray and communicate price. By doing so, you can gain insights into how to best communicate discounts and understand what different price thresholds need to be communicated in what way.
In conclusion, a strategic psychological pricing approach can finetune the small visual details of your price tag, responding to deep-rooted cognitive processes, and can modify price perceptions. However, the key lies in communicating the value proposition clearly and visually as appealing as possible to consumers. In the end, pricing is so much more than just numbers; it's a dialogue with your customers.
If you're looking to take your business to the next level, you need to nail your pricing strategy. At boobook, we understand this and are committed to helping you navigate the complexities of pricing. Our approach combines robust consumer-based data analysis topped with insights from behavioural economics to create pricing strategies that align with your customers' decision-making processes. This drives profitability and business growth.
In our upcoming article, we’ll talk about the substitution method (or intuitive brain stimulation), so stay tuned!
