Pricing Psychology with Paulina Masson

Pricing Psychology with Paulina Masson of Shopkeeper.com 
Pricing psychology - is there a simple rule of thumb or complex?
Pricing psychology can be somewhat complex.

The biggest first thing to say about pricing is to keep it simple!

If you make price plus discount hard to calculate that puts buyers off

Think of $20 price plus $3 coupon

Two options on amazon

Round $ amount
%age off

Paulina usually uses amount, but if high price point, give % off

It’s easier to calculate.
Testing of Price vs. Coupon
Which converts better?

$21 product plus $3 coupon

$21 product plus $4 coupon -

The $20 offer works better. Why?

PM believes that if it is a multiple of 21 (trained with multiplication table) we calculate discount quicker.
Using Split Testing to Determine Price Points
Most split testing on Amazon is not done well.

PM wouldn’t recommend it for the most thing unless you have a consistently high volume on top sellers in a short time.
Why not? Statistical significance
Statistical significance is needed! 25 sessions are not enough.

Other things change: PPC gives waves of traffic so you’d need to turn it off.

Seasonality is strong- and festivals eg the Cinqo de Mayo
Split testing for a week
PM runs like this:

One price for two weeks (tools online calculate statistical sign)

Put the number of sessions - CVR wanted - tool gives statistical significance
500 views a day, want 15% CVR (have 12% at the moment )
the tool tells you to run for

Did a whole year of split testing.
Split testing is hard - decide price more by your reading of the marketplace
Mostly on Amazon, we are competing on price - you can’t split test luxury

Overall supply and demand.

Split testing big differences will show up - but small differences a harder to work out.
Pricing Psychology Tricks: Strategies in Picking the Right Pricing
Why use .99 in end or .97?
$29.99 vs $30 - we all read left to right so “twenty-something” implies it’s cheaper

Also, we started equating “$0.99” to bargain and also low quality.

If you’re positioning the product as a luxury product for the spontaneous buyer. Eg $28 vs. $27.99.

It’s a differentiation point.

$0.97 vs. $0.99 vs. $0.79 probably doesn’t make so much difference.

People will still read it as “twenty-something”  - it gives extra work for the consumer’s brain.

Plus you make more profit.
Odd numbers vs. Even numbers
Because we are so conditioned to $x.99 - we are conditioned to feel that odd numbers

Even numbers give more of a luxury feeling eg $22

Odd numbers give more of a bargain feeling eg $21
What does the Shopkeeper app do? 
It’s a gross margin calculator but more of a business dashboard.

You can decide what the key things are going to be for you to focus on.

It’s designed to be very quick and easy to see P & L by profit line.

You can then dig into more and more complexity

amazingfba.com/shopkeeper redirect to an Affiliate link

Very nice deal - most software gives 30-day free trial.

This has 6-month free trial to analyze data and explore the tool.

If you’re a beginner, you can’t usually afford tools like this - but this is a huge opportunity to get to know the tool.
Bonus
Most apps give a 30-day trial

But Paulina is offering 6-month free trial

amazingfba.com/Shopkeeper
What is your one tip for a serious seller on pricing?
Make a task to simplify your pricing.

Simplification is the key to getting better conversions.

It’s the key to making more money. You don’t have to raise prices.

You can raise your click-through rate. This translates to more traffic from Amazon.

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TRANSCRIPT
Michael Veazey 0:04
Okay, so we've let's get on to the psychology. So we've touched on it a little bit, particularly with the methodical versus the spontaneous buyer. So is there any sort of big picture psychology that drives pricing?