It is not an un-common question and it has been a much debated topic. Should you test your pricing?
Today we are going to discuss the good, the bad, and the ugly when it comes to testing price.
There is a fine line with pricing to find the sweet spot for what the market can bear along with getting the biggest number of people to actually buy.
As we always preach, you have to pay close attention to your numbers not just the conversion rate to sale, numbers such as your customer value and your earnings per click.
But one of the suggestions we recommend to clients is to simply “raise your prices” but not without testing them first.
Some of the downfalls with testing is setting the expectation and training your audience on a certain price point and then later having to justify a big increase. If you have enough fresh traffic to your sites then it is often easier as their is less friction. It is also recommended that you test this on fresh traffic first to see what impact pricing actually has before changing it across the board.
Depending on your market the slightest change in price can make or break you.
For example a campaign we were working on had a low margin physical product priced at $12. The competitors in the market were priced anywhere from $10 to $20. In an effort to increase customer value and make the product a little more profitable we tested just a slight increase.
They were getting on average 300 new orders per day at $12. We tested the price at just $12.99 and the conversion rate dropped off to just about nothing. That little increase was way more than the market and audience could bear and resulted in pushing the conversion rate to sale down the drain.
This is just one example.
When looking at pricing we often say not to test the little improvements such as $10, $12, $14. Instead test $10 and $60 or even $100.
With this you can learn quicker of what the market can handle, what they will pay, and what your conversion rates are…
A few years ago I was working on a campaign that had a monthly membership priced at $29. Out of curiosity we tested the price at just under $100. The result the conversion rate stayed about the same (a slight drop) but the profit from the campaign tripled and believe it or not people actually stayed on the membership an average of 1.5 months longer.
So pricing definitely matters.
Again it matters what your product is and what market you are in that can determine price.
Two products in the same market, same audience, by the same company, just covering different topics. Both were originally priced at $37, we will call them Product A & B.
We tested $19.95, $27, and the control being $37 on both.
The result on both products, $27 absolutely killed the conversion rate reducing it by more than 70%.
On product A, $37 won, beating $19.95 by more than double. While on product B, $19.95 doubled the conversion rate bringing in almost twice as many customers as $37 price point while the initial customer value didn’t change but by a couple dollars.
If we wouldn’t have tested the prices we would have never known, and as a result would have lost out on all those extra sales of the product.
To sum this all up, testing price matters but you need to be careful with how you are testing it as it can make or break your entire campaign.
If you need help testing your pricing and increasing your overall conversion rate, contact us today to discuss how we can help