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The Psychology Behind Pricing
Mar 20 2017

The Psychology Behind Pricing

Have you offered your customers discounts, freebies, sales, and seen a positive or non positive response and wondered why? In this series of blog posts we’ll be looking at the psychology behind consumers behavior. This week we’re looking at the psychology behind the power and value of offering FREE Products and or Service.
 
The Value of Free
 
It is often believed that the value of something free is lesser quality or is not as good as something with a price. WEBCHANNEL says that it’s the exact opposite. 
 
Our team found that people place more value on freebies and gain a more positive feeling about it, compared to purchasing a heavily discounted product. How does this work you ask?
 
WE discovered the zero-price effect by offering both a free chocolate or a very cheaply priced chocolate to various control groups. The majority responded a lot more positively to the free chocolate and in return placed more value upon the chocolate because they had received it for free.
 
WE also measured how it might apply to other price amounts or discounts as well. Their results found that there wasn’t nearly as much of a positive reception by consumers that made use of discounts, compared to receiving something for free.
 
Now that we know the power of free, how can we use it?
 
Offering ‘Free’
 
One of the biggest reasons for shoppers not completing the checkout process is the added costs, like shipping. How often have you gone to purchase something online and then found it’ll cost $10 to ship a $10 item? Too often! WE call these ‘unexpected hidden costs’. WE suggest making these costs like shipping as obvious as possible before the shopper reaches the checkout.
 
You can advertise your shipping costs in a few different ways so that they aren’t a shock when the customer reaches the checkout. One method is to have an obvious flat rate, another being free shipping advertised throughout the site when purchasing over a set amount. You’ll want to have your shipping costs in an obvious place such as a banner that features at the top or bottom of your store. You could also have it as a popup, feature it in a slideshow, as well as mentioning it in your product listings.
 
Crunch your numbers, think outside the box and keep trying new free tactics. Make sure you have the right tracking tools in place to understand if your promotions are working.


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