By Nancy Harhut (Chief Creative Officer)
It’s not easy to get people to part with their money.
And there may be a very good reason for that.
Social scientists have found that paying for something activates the same part of our brain that physical pain does.
It can literally hurt to spend money.
Fortunately, if you know some of the decision shortcuts people use around money, you can lessen the pain – and increase the chances people will buy what you’re selling.
1. WATCH YOUR DECIMAL POINT
For example, take $102 and $102.00. Technically, these are the same price.
But scientific research shows people perceive the second one to be bigger, because of the decimal point and two zeros after it. It takes up more space and the human brain reads it as larger.
So if you’re showing savings or value, use the decimal point version. If you’re showing cost, drop it.
2. BUNDLE UP
Another way to minimize the pain of paying is to use bundles.
George Lowenstein, the noted neuro-economist, found that it’s hard for the brain to justify a series of individual purchases, because each one creates its own pain point.
By bundling several items together into a package, the brain gets only one hit of pain.
In fact, Lowenstein’s research shows some consumers will even pay more for a bundle than they’d pay if they chased down each individual item separately.
People prefer the shortcut.
Additional research into bundling has uncovered another decision making shortcut – hedonic bundling.
Hedonic bundling works this way. When you have two or more items, instead of discounting the price when you buy them all, you place a heavier discount on the price of the one item that is most “hedonic” – in other words, the one that gives people the most pleasure and is the least utilitarian.
For example, if you are selling a laptop and a pair of really high-end wireless headphones, place the discount on the headphones.
The idea is the actual amount you’re selling the bundle for would be the same. You just advertise the discount as being on one thing when customers buy the other at full price.
According to the Journal of Marketing Research, this approach increased purchases from 62% to 82% in at least one study.
3. TO THE LEFT, TO THE LEFT
Where you put your prices can also have an impact on sales. For example, if something’s on sale, you should always have your original price to the left of the sale price.
That way people read it first and it becomes the “anchor” – the price that they compare the new one to.
Since people often don’t know absolute value of something, their decision-making shortcut is to look at the relative value.
For example, someone may not know what a wine refrigerator should cost. But if they see one that’s usually $400 on sale for $325, they’ll decide that – relatively speaking – it’s a good deal.
The same principle holds if you have a range of prices for similar items. List your most expensive option first. Then everything after it will appear to be a better deal as a result.
Finally, when you show your original price with a slash through it and your sale price to its right, research indicates that the bigger the distance between the two prices, the bigger people perceive the savings to be.
BONUS TIP: Along the same lines, a study from Clark University and UConn found that consumers judge sale prices that are written in smaller type as a better value than when they’re written in a large, bold font. That’s something you can quickly test the next time you design an ad or lay out a webpage.
Nancy Harhut is the Chief Creative Officer for Wilde Agency. This September, she’ll be delivering the opening keynote session at NEMOA’s DirectXchange, the only national conference for catalogers and etailers.
Interested in learning more about the role of behavioral science in marketing? Contact us at info@wildeagency.com or follow Nancy on Twitter.
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