If you are a business owner looking to increase your monthly sales without having to sit down or dedicate much of your time - going back to your pricing tactics is your best bet. Here are some pricing tactics that drive people to purchase more, so you can begin building your business empire today!
Have you noticed that in Fall, every major restaurant food chain launches a pumpkin dish? Starbucks' Pumpkin Spice Latte has sold over 200 million cups in the last ten years.
Seasonal discounts work by offering a special discount or a unique product for a limited time, using a season as the time frame.
The trick here is FOMO (Fear of missing out). Seasons come to an end, so seasonal discounts evoke a sense of urgency in customers. Another psychological factor is exclusivity. You want to try to have that special discount no one has ever had because we all agree that bragging about something cheap is amazing. So for businesses, here are some tips:
• Be Creative – Try to make something different.
• Don't Go Crazy on the Price – Seasonal discount means a lower price (sometimes).
• Understand the seasons – Stay on top of the seasonal trends
• Offer something exclusive – It can be a new item
• Limit your supply – It adds to the feeling of exclusivity
Don't limit yourself to seasons; go for holidays, special events in your hometown. Celebrate Life.
Everyone believed people stopped using coupons until JC Penny tried eliminating coupons in 2012 and quickly saw a 23% drop in sales for the first three quarters of 2012. Hence, our suggestion: use coupons.
A coupon is a ticket or document that can be redeemed for a financial discount or rebate when purchasing a product.
The great thing about coupons is that they are easy to implement. Nowadays, it can be electronic, sending it to your customers' email. If you don't have your customer's email, include the coupon with the check. I, for instance, only go to McDonald's when there are the 20 piece McNuggets for $4.99. Coupons are a great way to drive new customers or create customer engagement. A good trick is launching your coupon on Groupon and implementing some good old guerrilla marketing.
A price bundle is an easy way to address your buyer persona directly by grouping products into a single comprehensive price or an all-inclusive reduced price.
A great example is TGIF all you can eat appetizers for $10, or Chipotle has two entrees and one appetizer for $20. You can think of it as creating combos that are meant to attract specific consumers – the business people, students, families, big groups, or couples.
Many fast-food restaurants have nailed this tactic by creating specific food groupings targeted directly towards each buyer personas. Our 3 step plan to creating price bundles is this:
1. Buyer Persona: Think about your buyer persona – his budget, what he likes to buy, and at what time of the day or day of the week.
2. Choose the right fit: Think about the mix of products you can create that attract him.
3. Implement, measure and repeat.
The key to implementing the price bundle is understanding your buyer persona and creating opportunities they can not miss.
How many times have you been lured to a place you thought you would only spend a couple of dollars or maybe not, and you leave spending a lot-lot more than you thought? Well, this happens to the best of us, and this old trick is called leader pricing.
Let's talk a little about the psychology of why the bottomless mimosas deal is great for your restaurant. Our human brain makes decisions by outweighing the pros and cons of each situation, and this thought process involves a deep consideration of our economic sacrifice. So, when customers go for bottomless mimosas, their brain says, "We are winning. We beat the system" because they are not spending what they would usually spend for tenths of mimosas, but the next thought process is the one that makes them spend most of their money "Because I saved this much money, now I can spend it." So they decide that lobster and oyster go well with mimosas and end up spending a lot more than they expected.
Leader Pricing is a strategy to lure customers in by setting lower price points and reducing typical profit margins to stimulate interest in the business as a whole or a particular product line. It's called a loss leader when you sell products at a loss.
The important detail with leader pricing is using a product that attracts the customers in the first place. A great example is happy hours which attract many customers looking for a cheap drink but spending more. People won't fall for the pricing tactic if the product is not exciting enough. It is very important to market the initiative as much as possible as well, you can have the best bait, but if people are not aware of it, it will turn out to be a complete failure.
I first read about this tactic in a book about consumer psychology called Buyology. At first, I thought it didn't make much sense until we started applying it with some clients. The story behind how price lining works go something like this:
You go into a restaurant you've never been to before for a date. The hostess sits you down, and you decide to take a look at the wine carte. The most expensive wine looks unaffordable. You look for the cheapest option, but this might not impress your date. You decide the middle option. What happened? Price lining.
Price lining is a process used by retailers to separate goods into cost categories to create various quality levels in the minds of consumers.
Price lining is a psychological tactic that plays with our basic decision-making. If your business wants to sell its current most expensive service, you should try putting a more expensive one on the carte. If your most expensive service is a hard seller, try putting a ridiculously more priced service available. We decided not to go for the most expensive decision, so let's settle for the second one.
Many businesses have played it beautifully by setting a price line so high that all the other products or services seem affordable, but also by creating a product or service so attractive it drives itself customers. In restaurants, dishes with truffles or gold are very popular nowadays, and although unaffordable for many, they make the whole menu prices seem very amenable.