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How Comparative Pricing Doesn’t Always Work on Shopify [Apr, 2024]
Last modified: April 1, 2024
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There are many ways that you can make more money on your website. One way is to add comparisons to your website. This can be a comparison to another product you sell or a different service level, or it could be based on a competitor.
One of the biggest aspects that you can compare is that of the price of your product versus another. In theory, if you can show that your product can do as much or more than a competitor and for a cheaper price customers will choose it. There are pricing table apps, like this app here, that can help you provide a good comparison on your website. These can be highly recommended, but they aren’t always effective.
In some cases, you might be better off ignoring the comparison and instead concentrating on the benefits of your product.
Comparative pricing tactics may backfire and lead to customer mistrust and dissatisfaction, ultimately harming your brand reputation.
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Brand Value is more Trustworthy
One of the main problems is that many customers are looking at the value of the products not just based on price, but on the brand that is selling them. For instance, if you’re selling a home brand product and comparing it against a national, well-known brand’s product, then most customers will be less risk-averse.
There are two main options that most customers will make: they will either buy the more expensive option because they ‘know’ it will offer them a better chance of success or they will not make a purchase at all.
Research by some top universities has shown that when you ask customers to make a direct comparison, they are more likely to exit the entire website without making a purchase. If you have both products on your website, the chances are that they will buy the more expensive, well-known brand.
Therefore, comparative options can often cause problems.
Comparative Pricing can Help to Sell Higher Options
However, when comparing different levels of a service or product, comparative pricing can help you sell more at the top range. You need to use an option called decoy pricing. You can read more about decoy pricing here.
Essentially what you do is that you have three price points. You have one low price and one high price point. You then have a middle price point that is closer to the higher one than the low option. In some experiments they’ve even had the middle option at the same price point as the higher option.
What this does is that it encourages people to turn from bargain hunters (where they select the lowest price) to value seekers, where they buy a product because it has more value. Research has found that when decoy pricing is used to sell your own products you can earn more on higher value options.
For example, selling a PC that has RAM storage at:
28GB – $199
256 GB – $249
512 GB – $299
The above case would be considered decoy pricing as the price for the 256Gb and the 512GB are very close and far enough away from the 128GB pricing to show a difference.
Benefits of Comparative Pricing on Shopify
Enhanced Perceived Value
We have observed that one of the most significant benefits of comparative pricing is the enhanced perceived value it offers. By displaying the original price alongside the discounted price, customers can instantly see the savings they are gaining.
This visual representation of a deal can significantly boost the attractiveness of a product, leading to increased sales and conversions.
Increased Sense of Urgency
In our extensive experience in e-commerce, we’ve noted that comparative pricing instills a heightened sense of urgency among shoppers.
When customers see a discounted price, they are often compelled to make a purchase quickly to avoid missing out on the deal. This urgency can be amplified with the strategic use of countdown timers and limited stock indicators, driving swift customer actions.
Boosted Conversion Rates
Comparative pricing has been a consistent factor in boosting conversion rates. The visual representation of savings not only attracts customers but also encourages them to proceed to checkout.
We’ve seen a tangible increase in conversion rates when comparative pricing is implemented effectively, showcasing its potency as a sales strategy.
Challenges of Comparative Pricing on Shopify
Customer Skepticism
However, it’s not all smooth sailing. One of the challenges we’ve encountered is customer skepticism. If the deals appear too good to be true, or if they are presented incessantly, customers may begin to question the authenticity of the prices and the quality of the products.
Balancing the presentation of deals to avoid inducing skepticism is a nuanced aspect of leveraging comparative pricing.
Lowered Perceived Value
Another challenge is the potential lowering of a product’s perceived value. If items are constantly marked down, customers may perceive them as less valuable or of lower quality.
Our experience underscores the importance of strategic discounting to ensure that the perceived value and integrity of the products are maintained.
Legal and Ethical Considerations
From a legal and ethical standpoint, there are considerations to keep in mind. Pricing must be transparent and honest to maintain customer trust and comply with legal standards.
We emphasize the importance of ethical practices in presenting comparative prices to avoid misleading customers and facing potential legal repercussions.
Strategies to Optimize Comparative Pricing on Shopify
Transparency is Key
Transparency is a cornerstone in making comparative pricing effective. Clearly displaying the original and discounted prices, and ensuring that discounts are genuine, helps in building trust with the customers. Avoid inflating original prices as savvy shoppers can easily spot this, leading to a loss of credibility.
Strategic Timing of Discounts
Timing is pivotal. Offering discounts during peak shopping seasons or when launching new products can maximize the impact of comparative pricing.
We have observed that aligning discounts with events like Black Friday, holiday seasons, or inventory clearance, not only boosts sales but also enhances the perceived value of the offers, making them more acceptable to the shoppers.
Utilize Social Proof
Integrating customer reviews and testimonials adjacent to the comparative prices can be a game changer. In our experience, social proof acts as a reassurance to potential buyers, mitigating skepticism and validating the value proposition.
Positive reviews amplify the attractiveness of the deal, encouraging more conversions.
Segmented Offers
Personalization has been a key element in our strategy to enhance the effectiveness of comparative pricing. Segmenting offers based on customer behavior, preferences, or demographics ensures that the deals resonate with the target audience.
Tailored offers have consistently shown to have a higher conversion rate, as they align closely with the customers’ needs and expectations.
Dynamic Pricing
Dynamic pricing is another strategy we’ve effectively employed. Adjusting prices in real-time based on demand, inventory, and competitors’ prices ensures that the offers remain attractive and competitive.
This dynamic approach requires a robust monitoring system but pays dividends in optimizing the effectiveness of comparative pricing.
Testing and Analytics
Lastly, continuous testing and analytics are integral. We advocate for A/B testing to evaluate the effectiveness of different pricing strategies and presentations.
Analyzing data on customer behavior, conversion rates, and sales provides insights that are instrumental in refining and optimizing the comparative pricing strategy to maximize its impact.
Conclusion: How Comparative Pricing Doesn’t Always Work on Shopify
Comparative pricing can be a useful tool for selling on your website, but only when you’re using it correctly. Don’t compare your prices to a competitor’s online because sometimes it can reduce your sales. Instead, focus on using decoy pricing and other tricks to help you convert more on your website.
- Interested in Shopify Pricing? – Read our updated overview of Shopify pricing options
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Can I change the prices of my products in real-time based on demand?
Yes, you can change the prices of your products in real-time on Shopify to respond to demand fluctuations. Utilizing dynamic pricing apps or features, you can automatically adjust prices based on real-time market trends, demand, and competitor pricing.
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Is it possible to offer bulk discounts on products?
Yes, it is possible to offer bulk discounts on products in Shopify. You can utilize built-in features or third-party apps to set up tiered pricing structures, allowing discounts to be automatically applied based on the quantity of products a customer purchases.
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How can the “Compare at Price” feature be optimized for better customer engagement and increased sales?
The “Compare at Price” feature on Shopify boosts sales by enhancing customer engagement through strategic discount displays that create a sense of urgency. Businesses can optimize this tool by offering significant yet realistic discounts, periodically reviewing and adjusting prices, and analyzing data to align with market trends and customer behaviors.
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