If you’re worried about price and discount shoppers, make sure you’re not doing one these tricks they know to check for.
Major retailers have been applying these pricing hacks for decades, and price shoppers – and especially discount shoppers – know how to spot them.
Charm Pricing = listing the price as 1-5 cents low to create the “left-digit effect.” Some people only see the first two numbers in a price, so if you make it just 5 cents less, it looks to them like it’s a whole dollar less. Check the gas station price closely next time; that little tiny “9” has been faking us out for years.
Mark-up Pricing = adding more than 50% of the cost to the final list price, especially when you know you’ll be offering discounts later. This method allows the business to continue to enjoy good profit margins even when offering discounts. Check the clearance aisle at the grocery story next time for glimpse of mark-up pricing resulting in even high clearance prices.
High-low Pricing = putting a series of items on a “deal” rotation, lulling a consumer into a regular buying pattern. Sodas are really good at this particular pricing strategy, even rotating their deals among grocery stores on a weekly basis. If you follow the circulars, you can get the deal every week, ensuring the soda manufacturer a regular revenue stream.
Dynamic Pricing = a newer pricing strategy that takes advantage of Big Data collected online about your purchasing patterns. This strategy allows an online retailer to post a different price for you than for others. Seems fishy, but it is a legal pricing strategy; insurance agencies have always done this.
Prestige Pricing = ensuring that luxury items – like jewelery or high-end cars – carry a price that reflects that luxury status. In this case, sometimes a higher price incentivizes a purchase rather than a lower price.
So whether you’re developing your first bill rate for your cleaning or home services, working up a short- or long-term special, or preparing to raise your rates, consider how one or more of these pricing strategies could work in your favor – or cause you headaches.
Read more at Business Insider.