- Growth Catalyst Club
- Top 5 Pricing Mistakes to Avoid
Top 5 Pricing Mistakes to Avoid
Growth Catalyst Club
Top 7 Pricing Mistakes to Avoid That Are Costing You Money (And What to Do Instead)
One of the easiest and highest growth-catalyst things you can test is pricing.
So, today we’ll go over 7 pricing mistakes you need to avoid and what to do instead to increase your profits and sales.
#1 Not A/B testing pricing.
Anthony Castrio increased the price for Indie Worldwide membership from $29 to $49 for new members. His conversion rate went down and growth stagnated.
But if the test worked he’d almost double his sales. A/B testing your pricing is an easy way to increase your sales and profitability.
#2 Not giving pricing options.
The same Anthony made another mistake. He also removed the monthly option and left the yearly option only. Despite a 180-day-no-questions-asked refund policy, the number of annual signups was the same as before, and the number of new monthly memberships didn’t increase.
So a lesson here, you have to give multiple pricing options. Example: $300/lifetime 100/year, $15/mo.
#3 Not testing different pricing frames.
You can present your offer as “$50/year”, or “$1/week”, just like Wall Street Journal does. The way you frame your pricing can increase your conversion rate and sales.
#4 Not testing guarantees/ flexible cancellation policy.
When someone visits your website, they have objections like “What if I buy and this won’t work”
They don’t want to block their credit card to get a refund sometime later on.
A flexible refund/ cancellation policy removes this objection and increases your conversion rates, which can increase your sales and profit.
Zappos still has a 365 FREE Returns Policy
#5 Not presenting prices in descending order.
A series of pricing studies showed that people tend to spend more when shown pricing in descending order (or from left to right). This worked especially well for people with lower levels of product knowledge.
To increase the value of your product, you can create a new product that is significantly more expensive with fewer features/benefits. This will automatically increase the value of your core offer and typically lead to an increased conversion rate.
#6 Not testing decoy offers
One good way to immediately increase the value and price of your offer is to use a decoy pricing strategy.
The principle behind it is creating a slightly less desirable product option, called the decoy, so your core offer looks more appealing.
The offer in the middle is significantly more attractive
#7 Not testing magic numbers
Testing prices ending with .99 can give a perception of a better value offer.
This could be because these prices are associated with sales and also because the price is anchored to the leftmost digit.
#8 Not having multiple payment options
Having the most used payment options accessible can boost your sales by up to 71%. Whenever you’re selling something make sure your customers have plenty of options to give you money.
Growth Hack: How Wistia Doubled Sales at 88% Lower Ad Spend
Most SaaS companies have cheaper plans with limited features where the more you pay, the greater the number of features you get.
Wistia had the same pricing structure.
But in one pricing test, Wistia gave the same functionality to everyone, regardless of their plan, and limited the number of videos users could upload.
So the more you pay, the more you can upload but you still get to use the same features.
The hypothesis was that the new pricing model would allow new users to better understand the product’s value proposition and functionality.
And hopefully, that would remove this barrier to conversion and increase sales.
This is how their pricing looked after the change
The new pricing model led to increasing sales by more than twice at 88% lower ad spend.
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