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Latest Pricing Insights

Advances in Price Optimization Through Measurement of Willingness-to-Pay

Posted by PriceBeam on June 3, 2019

Price Optimization is Moving from Guesswork to Science-backed Insights

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Topics: Marketing, Pricing Psychology, willingness to pay, price research, price positioning

Anchor Pricing

Posted by PriceBeam on January 22, 2019

Anchor Pricing is the concept of making a product that was first offered seem cheaper when it put alongside another product. An example of this would be initially offering a customer a product that costs 300 GBP but then showing and comparing a more expensive alternative, say 450 GBP to that customer. That first product then acts as an anchor as customers will use that first product as a reference point for selecting a product to purchase. Customers will perceive the price of two products relative to one another, and the customer uses the first product offered as a comparison point for other products as well. 

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Topics: Pricing Psychology

7 Psychological Pricing Strategies

Posted by PriceBeam on January 8, 2019

Implementing psychological pricing strategies can help companies in many different ways. Utilizing and crafting the perfect psychological pricing strategy is essential to convert browsers into buyers. Businesses need to take into account how target customers react to different products and sales. Once this is known, firms are ready to determine a psychological pricing strategy that is best for them. Psychological pricing is useful because it allows businesses to attract customers when they are finalizing their purchasing decisions. Here are seven different psychological pricing strategies that businesses can use:

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Topics: Pricing Psychology

Using Prestige Pricing Effectively

Posted by PriceBeam on December 19, 2018

Businesses will spend a lot of time finding the optimal pricing strategy for their products or services. Pricing them too low and businesses can risk undervaluing their products. Utilizing a pricing strategy like prestige pricing can help firms cash in on their products or services. Prestige pricing, or premium pricing, is a psychological pricing strategy that aims to give consumers the impression that the product they are offering is of higher quality simply because its price point is higher. In some cases, retailers may refer to prestige pricing as image pricing as companies want to give customers an image of exclusivity for their products. 

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Topics: Pricing Psychology

How to Determine the Next Best Alternative Price for Value-based Pricing Strategy

Posted by PriceBeam on December 5, 2018

Determining the next best alternative price is an important factor of value-based pricing. The next best alternatives price serves a comparison point for companies when they determine a value-based price for their new products. Firms determine the value of their product or service by comparing to the next best alternative product or service. A product is seen as valuable if it has better features and performs better than other products in the market, regardless of what the alternative product actually costs.

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Topics: Pricing Psychology, value-based pricing, pricing research

Competitor Prices: Do They Really Matter?

Posted by PriceBeam on December 1, 2017

 

"Can we include competitor prices into the price research?" is one of the more frequently asked questions at PriceBeam. The answer is a loud "yes", but sometimes the second question should be: do competitor prices matter?

The answer is "most of the time". But sometimes the focus is too much on competitors compared with the adequate attention to how you deliver value to your customers. Competitor prices do matter, because they set a reference against which your value is being compared. In value-based pricing models there is often a NBCA (Next Best Competitive Alternative) to which value drivers are added or subtracted, to arrive at the value of your own product. 

But products also deliver value on their own. If your product or service helps your customers, it does so regardless if the competitor is priced high or low, or doesn't even exist. And this is where too strong a focus on competitive pricing can become an issue. In organizations overly obsessed with competitive prices there is a tendency to only focus on how their own price compares with that of the competition. Conversely, they don't focus enough on delivering independent value through product benefits and features. 

PriceBeam's price research methods focus both on your own value-based pricing and customers' willingness to pay for that value, but also allows you to bring competitive WtP analytics in play. The outcome is a solid understanding of your own value and pricing opportunities, while keeping a health eye on the competition.

 

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Topics: Pricing, Pricing Psychology, competitors

Create Transaction Utility and Increase Willingness-To-Pay

Posted by PriceBeam on March 27, 2017



Transaction utility is a term coined by world-renowned behavioral economist Richard Thaler, based on a series of experiments he conducted with relation to creating utility via transaction design, and how this can be used to charge higher prices without losing out on sales. While the term was originally used to describe a few select biases, it is now used as a general term to describe value-adding (or subtracting) features that are not directly related to the product or service. Let's look at an example of how transaction design can change consumers' value perception:

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Topics: Pricing Psychology

Drip Pricing: How and Why Does it Work?

Posted by PriceBeam on March 13, 2017

 

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Topics: Pricing Psychology