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How to Use Price Perception on Shopify
Last modified: March 19, 2024
When it comes to selling, the perception of price in relation to the value of the product/service and the rewards for buying is very important. It sounds complicated, but really isn’t. Customers are always making a judgment about whether a product they buy has more value to them than the money they’re exchanging.
Experiments have shown that price perception is very influential.
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The Beer on a Beach Experiment
In one experiment, two scenarios were tested. People were asked whether they would like a beer. The first group were tested by asking whether they wanted a beer to drink on a beach that was bought in a local, run-down, store. Another group were asked whether they wanted to have the beer on the beach, bought from a local high-end hotel.
The price for the beer was the same, it was just the perceived location of where the beer was being bought. The results from the experiment were shown that people were less likely to buy from the local because the price was the same as the local hotel, and they didn’t understand why it should be that, even though the beer was the same.
Turquoise Jewelry
Another instance that shows perception is when an online seller accidentally made a mistake when they wanted to reduce some jewelry down to 50% because it wasn’t selling as well. What they accidentally did was double the price. This had an instant impact where they sold out of the jewelry.
The reason was that this had a psychological impact that the turquoise jewelry was worth more and therefore should be purchased before it ran out. Before the price change, the same color made no sales and was ignored by buyers.
Important Lessons to Learn
The lessons that can be taken from the two examples above are really simple: it isn’t so much the cheapest price that wins the value of the customer, but the perception of that price against what they’re getting. The same product can be more expensive from one place, but if the brand offers more value, then the customers will buy it.
It is sort of like a prestige value for the customer. If the product is valued at more or comes from a more high-end brand, then they can charge a greater amount. Therefore, you’ve got to market your brand, not just the product, to display more high-end, prestige if you’re looking to charge more for products.
Otherwise, to sell at a lower price, you need to showcase that you’re more of a budget brand.
This can be hard to pull off, but there are simple ways that you can design your website’s brand to pull this off. Most high-end brands use white in their background, whereas budgets tend to use more bright colors. This might be something that you need to do. With themes like Shoptimized and Booster, changing the background colors can be really easy. Other options can allow you to make the website look more prestigious/budget. It depends on your goals.
Conclusion: How to Use Price Perception on Shopify
Price perception can make or break a sale. When customers think you’re more of a budget brand, they expect prices to match. If they think you offer more prestigious value, they will want higher prices. You need to pick a price point that is suitable for you to make this work.
Moreover, Shopify’s advanced features enable merchants to dynamically adjust prices based on real-time market conditions, customer behavior, and promotional campaigns. This flexibility allows businesses to capitalize on opportunities for price optimization and responsiveness, further increasing conversion rates.
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How can I make my Shopify store appear more high-end?
To make your Shopify store appear more high-end, focus on a clean, minimalist design, use high-quality images, and choose a color scheme that reflects sophistication and elegance, such as neutral or muted tones.
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Is it better to position my Shopify store as budget-friendly or high-end?
The positioning of your Shopify store as budget-friendly or high-end depends on your target audience and product type. Understanding your customer base and their expectations is key to deciding the right approach.
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What are the risks of changing price points on Shopify?
Changing price points on Shopify can risk alienating existing customers or misaligning with market expectations. It’s crucial to understand your audience and market trends before making significant price adjustments.
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