Smart Pricing - Get It Right
University researchers in the USA have found that most purchasers of products or services do not have any idea what the price of the things they buy should be.
This should be a major problem for our patients when buying frames, lenses and other products. They have several options when thinking about buying, but most of the time they rely on you, the optometrist to tell them what something is worth. In subtle and sometimes not-so-subtle ways we send signals to patients to tell them whether a price is high or low.
How we communicate to our patients about pricing is worthy of considerable thought. You can develop trust and convince your patient to buy, or do the wrong thing and throw their trust out of the window, along with future visits.
There are some basic messages commonly used that need some explanation.
Ending Prices with in “.99”
This is such a common tactic you would think that patients would ignore it, but studies published in Harvard Business Review clearly show that this is not so, and sales can be dramatically improved by careful use of 9’s on the end of prices.
Illinois university research demonstrated that sales of a particular dress were increased by 33% by lifting the price from $34 to $39 in a clothing catalogue. Lifting the price to $44 produced no extra sales. The effect is not just limited to whole numbers. A further study at Rutgers University showed that customers who were given a catalogue with prices ending in $0.99 were more likely to place an order, resulting in and 8% increase in overall sales, than those who received the same catalogue with prices ending in $0.00.
Researchers believe the 9 acts as an indicator of value, like a “sale” sign. Buyers are sometimes more sensitive to price endings that the actual prices. Combining numbers ending in 9 and “sale” signs has no effect.
Use prices such as $349.00 instead of $350.00. Or $399 instead of $410
Do not combine prices ending in 9 and “Sale” signs.
Do not use this everywhere, but for those products you wish to sell more of, such as a range of sunglasses, or a generic frame range. Known “brand” frames do not usually need this for of pricing cue.
Change your pricing around to shift the emphasis and move different products.
Price Indicator Items
Most people do not have a good idea of what frames and lenses should cost, but might be able to use a pricing reference in your practice to form an idea of whether you are expensive or not.
Research tells us that patients will use indicator items to evaluate your pricing position. A big stack of discounted contact lens solutions or a known brand at a carefully calculated price point might give them a clue about what to expect in all parts of your range. The discounted solutions might lead to higher contact lens sales, and reduce the likelihood of internet purchases.
A great price on Adidas sunglasses might not suit everyone but most people under 55 years old have an idea what other Adidas products are worth and if the price seems good the Prodesign is probably good as well.
Pick one or two products to carry your pricing message and give your patients a point of reference
Use clear signage and obvious positioning
The sale sign is the most commonly used pricing message. Just putting the word “sale” next to an item can lift sales by up to 50%. Great care needs to be taken to ensure that the sign is not over used. There are only so many special events that justify a sale before patients will become suspicious.
Also putting a sale sign on more than 30% of frames in a category can reduce the effectiveness of the sign considerably. Placing sale signs on multiple items can increase demand for those items – but may reduce overall demand. Total sales are highest when some, but not all frames in a range or category have sale signs.
Only have a couple of sales each year
Do not have all your frames on sale but pick selected products in a range or ranges.
Keep the sale restricted to less than 30% of any range
Make the sale signs clear and obvious
If you are aiming for a quality image take great care with the use of these pricing tactics. Sale signs can raise concerns about quality. In a boutique range a sale sign might scream “unfashionable” to the discerning buyer. There is a point of view that “quality never goes on sale”.
If you must have a sale be sure to limit its scope carefully and have a clearly communicated reason.
Tracking the Effect
If you are going to use these devices and tactics you must use them systematically and measure their effect. Ideally you will measure sales before and after changes to accurately quantify the benefit from your changes. Remember you are looking for long-term sales and patient loyalty. If you have too many sales patients will adjust their buying to take advantage, or become conditioned to cheap prices.
Sales and pricing changes cannot replace good sales technique and hard work. They are short-term tactics for a short-term benefit. Do not neglect your patient’s perception of quality. It is important to constantly reinforce the quality message and educate patients about quality features and benefits