Pricing is a mess. It’s a complex process in which you have to calculate the optimal level of profit to cover expenses. Also, discover how much money would people give for your product.
What really made me thinking about pricing is the first impression. Let me explain more. When you work in a Startup, you are not just Marketing Manager or Outreach and Lead Generation Specialist. You are dealing with whatever task that needs to be done, even though you have you’re the field of expertise for which you are actually hired. When you finish with Testing and Pre-testing, with planning and Investor talking – Next step is Product Launch. In this phase, you and your whole team are presenting your hard work online. So when you finally placed it for the whole world to see it, a question silently pops in your head: ” Should I highlight products features or price? ” ( At least this had happened to me ). I mean we have one chance to make the first impression. And then you do what every normal person can do – Google the shit out of this topic. Sometimes, I am very happy that I am still studying. Most of the web searches are going through Google scholar. I have found an answer to my question – thanks to modern neuroscience. Maybe we should go back to the problem itself.
When it comes to product pricing– what comes first: price or the features? So, let us try a little experiment: You are buying a laptop. There are two different purchase models. In one case, you are entering the store and in front of you is a lovely notebook. On the board next to it says Built-in graphics card, nice processor and a 13-inch screen. This information makes you think – This is perfect for my travelling lifestyle, just what’s its price? Oh, it’s $899.99.”
In another scenario – imagine that you are entering the store that has a sign: “All the laptops in the store are now $899.99” With that price in your mind, you start browsing throughout the store. Looking for the right laptop and reading all the product descriptions. In both cases – the laptop and the price are the same. So, in which example will we derivate more sales?
It is reasonable to assume that price information plays a crucial role in making a decision on whether to buy a product or not. In a study conducted by Stanford University, the scientist has researched the impact of price primacy – early exposure to the price. The study focused on the effect of the price and product information on the decision-making process. During functional magnetic resonance imaging, the price was shown to participants either before or after the product itself was presented. Behavioural economics latest research suggests that you will decide differently if you see the price first and a completely different process will happen in your brain if you learn about products features first. The phenomenon of “Price priming “ will make you more rational and cost you your conscious. In the study of Pricing effect ( Karmarker 2015 ) fMRI scanner has tracked brain arias that are playing part in process of decision making.
When you see the product before the price you will think about product basic characteristics. You are product primed. You will think about how your laptop feels in your hands, the colour of it or the sound of you typing for the first time. So – if you see the price first time – You will question product value. Is it worth the price? And that is a major critical process and mental overload for your brain. Emotions are on the low. What does this mean for us as marketers? Is “ Price priming “ making you win or lose leads?
Pricing is a place in mind
It kind of feels obvious. You want your end user to feel connected not rational. This is an easy win for features first. Emotional connection all the way. Nobody wants an extra mental process in your lead’s head.
Every behavioural question holds an answer at the same place- In human brain. fMRI has mapped the brain of researches participants. When the price has been shown first Medial Prefrontal Cortex had lit up. This part of your brain links price to a product and makes a decision. On the other hand, Nucleus Accumbens is a part of your brain that makes you like stuff – Laptop in this case. Although you want your customer brain to like your products, Medial Prefrontal Cortex has higher primacy. Which means that decision overlaps liking as Medial Prefrontal Cortex will derivate behaviour not just emotion or thought.
So what should you do? Start with what kind of product are you selling. Common goods or more unique. If you are dealing with creating a sales funnel for a product that has a lot of similar competitors go with a price priming. Presenting a product that is known for what it can offer do not asks for the extra intro. Using Price priming you will create more conversions. But here is the neuro-twist. The common product is more appealing if you set up a bargain price or a discount. On the other hand, If you plan to set up a campaign for the complicated or luxury product – Make sure that your site page delivers features first. Emphasize all the problems that you solve with your unique product and state all the benefits for your end user.
To sum up: Product and price primacy lead to different types of evaluation. Use your product as a starting point. Great products are priced on purpose. ( at least that what Ron Baker says )