How to set product prices so that users feel that the products are cheap?

99% of marketing has probably encountered these problems:

“Customers say our products are too expensive, what should we do?”

"Company A has started to reduce prices and promote sales again. What should I do?"

"We can't match Company B's low price, what should we do?"

"Sales performance is so poor, and the boss is unwilling to lower the price. What should I do?"

…

In the hands of junior marketers, price reduction seems to be the only weapon .

How would an expert solve this kind of problem?

Today I’m going to talk about a new trick: setting up reference objects.

1.

Any product that users think is too expensive is because they are using the wrong reference.

How can people tell if a product is too expensive?

There are three main ways:

The first is price comparison.

• Scenario 1: I bought it for only 80 yuan last time, why is it selling for 100 yuan this time? It’s too expensive.
• Scenario 2: Another website sells it for only 80 yuan, and there are free gifts. You sell it for 100 yuan, which is too expensive.

The second is value comparison.

• Scenario 1: The material doesn’t look very good, and it costs 100 yuan, which is too expensive.
• Scenario 2: Your brand is not well-known, why are you selling it for 100 yuan? It’s too expensive.

The third is budget comparison.

• Scenario 1: When you just get your salary, a meal of 100 yuan is not expensive; at the end of the month, when you are out of money, a meal of 100 yuan is too expensive.
• Scenario 2: If a piece of clothing costs 1,000 yuan, someone with a monthly salary of 5,000 yuan would say it is too expensive, while someone with a monthly salary of 50,000 yuan would say it is very cheap.

This is the truth about prices.

Users actually make judgments through comparison rather than rational analysis.

Since there is comparison, there must be a reference.

Any product that users think is too expensive is because they are using the wrong reference.

Let users make comparisons based on the reference objects you choose. This is the secret trick of awesome marketing.

How can we help users choose the right reference?

It depends on the person.

Different strategies need to be adopted for different groups of people.

2.

The first type of people judge whether something is expensive by comparing prices.

Reference strategy: using price anchors.

Put a higher-priced reference so that consumers will think your product is not expensive.

This reference is the price anchor point.

Where should I find the anchor point?

Method 1: Use market price or historical price as an anchor point.

This method is the most common. Next to the product promotion price, there is often a very high historical price or market price.

Method 2: Use high-priced products in the store as anchors.

Many stores will place a very expensive product in a conspicuous location, but only sell a few pieces in a year. The purpose of this product is to highlight the value of other products in the store.

Method 3: Use other companies’ products as anchors.

Other products can be found from competitors or from other industries.

Let me give you an example:

In the "5-Minute Business School", you only need to spend the money for a meal with friends (199 yuan a year) and the fragmented time for washing your face and brushing your teeth (5 minutes a day) to systematically learn the most classic and practical basic business knowledge.

In this marketing copy , two anchor points are included, one is [the cost of a meal], and the other is [the time taken to wash face and brush teeth].

These two anchor points highlight the two advantages of the course: it is cheap and less time-consuming.

Method 4: Use subcategories as anchors.

The so-called sub-categories include, for example, different packages, different configurations, different designs, etc.

Example 1: The price of a single item is 89 yuan, and the price of a set meal is 99 yuan. At this point, the package price will seem very cost-effective.

Example 2: The low-end version is 89 yuan, and the high-end version is 99 yuan. When comparing the two, the sales of the high-end version increased.

Example 3: The regular model is 89 yuan, and the customized model is 99 yuan, making the price of personalized customization more down-to-earth.

McDonald's is a veteran in this regard. Its menu always has various meal combinations, making you feel that you will lose out if you don't buy a meal.

3.

The second type of people judge whether something is expensive by comparing value.

Reference strategy 1: Take advantage of the halo effect.

The halo effect is a psychological phenomenon.

Once one aspect of an object gives people a very good impression, people will also give a better evaluation of its other aspects.

To put it simply, it can be understood as generalizing and loving someone and everything about him.

Celebrity endorsement is the most common form of halo effect. The same product seems to become more valuable after being endorsed by a celebrity.

By utilizing the halo effect, the value of a product can be increased, making consumers feel that it is worth the money, or even more than the money spent.

In addition to celebrity endorsements, there are many other ways to create a halo effect.

• Hanging out with celebrities: celebrity recommendations on book covers, celebrity photos in restaurants, and Jack Ma and Pony Ma in the circle of friends .
• Brand-following: If you want to go for the high-end route, you can open a store next to LV; if you want to go for the affordable route, you can open a store next to Zara.
• Achievements: Sales volume could be connected to circle the earth; won an international award; planned a well-known case.
• Design: There is no doubt that good appearance design can improve the grade of the product.

There are many methods, so I won’t list them all here.

It is worth mentioning that hunger marketing is also a kind of halo effect.

Limited sales, scalpers buying the numbers, and quick sales all give people the impression that the product is a hot seller, which in turn quietly increases people's evaluation of the product.

Reference strategy 2: Leverage the endowment effect.

The endowment effect is also a psychological phenomenon.

Once an item is considered one's own, one's assessment of its value increases.

for example:

At a fishing ground, people are often willing to pay more to buy the fish they catch themselves.

People will think that the cake they make by themselves tastes better and will also overestimate its market price.

The vast majority of drivers believe that their driving skills are above average.

…

These phenomena are all endowment effects.

How to use it?

The most classic case is Xiaomi’s sense of participation.

Involving users in the design of mobile phones improved participants' evaluation of the phones . This group of people are mobile phone enthusiasts and opinion leaders in their respective circles. The positive reviews they give have driven word-of-mouth to a wider range.

Therefore, if you want to improve users’ value assessment or favorability of a product, you can first make users feel that the product is theirs , such as a 7-day free trial, DIY, personalized customization, or a sense of participation.

4.

The third type of people judge whether something is too expensive by comparing it with their budget.

The strategy of reference: Using mental accounting .

This type of consumer feels that the product is expensive because the price exceeds his budget. The solution, then, is to increase the budget.

How to improve it? This requires the application of psychological accounts.

What is mental accounting? Let's do a little experiment.

Scenario 1:

You bought tickets for a show in advance, but found out before leaving that you had lost the tickets, which were worth 1,000 yuan. Would you buy new tickets to see the show?

Scenario 2:

You didn't buy tickets for a show in advance, but before you left, you discovered that you had lost your shopping card, which was worth 1,000 yuan. Would you go buy tickets to the show?

In the first case, the vast majority of people chose not to go to the show.

But in the second case, the vast majority of people chose to go to the show.

Both lost 1,000 yuan, but made completely opposite decisions.

This is because of mental accounting.

People unconsciously categorize their consumption, create different mental accounts, and allocate their own budgets.

For example, my mental account looks like this:

Eating and shopping in supermarkets belong to daily consumption accounts;

Watching performances and traveling around the area belong to the entertainment consumption account.

If I overspend on local travel in the first half of the year, will it cause me to stop going to the supermarket in the second half of the year?

Not really.

But I would reduce my budget for watching shows.

The influence between different mental accounts is small; within the same mental account, the mutual influence is large.

Therefore, when a consumer's budget is insufficient, he can be guided to switch to another mental account with sufficient budget.

Melatonin is an expert in this area.

Why is its advertising effect so good?

One of the important reasons is to choose the right mental account.

As a health product, Melatonin originally belonged to the health management account , but it placed itself in the gift account .

The benefits of doing this are very obvious.

First, the budget for gift-giving accounts is generally higher, and spending decisions are easier.

Moreover, in health management accounts, consumption items such as medicines, hospitals, and fitness account for a large share, and health products do not have strong competitiveness.

This is a classic example of using mental accounting.

5.

Talent belongs to a few, but routines belong to everyone. ——Kangxi's Master

Finally, let’s summarize today’s article:

1. What is the real reason why users think it’s too expensive?

This is because the reference is chosen incorrectly , as users judge the price of products through comparison rather than rigorously analyzing the costs.

2. How to choose a suitable reference?

It depends on the person.

The first type of consumers : judge whether a product is expensive by comparing prices .

The reference strategy is: using price anchors.

The second type of consumers : judge whether a product is expensive by comparing its value .

Reference strategy 1: Take advantage of the halo effect.

Reference strategy 2: Leverage the endowment effect.

The third type of consumers : judge whether a product is expensive by comparing their budget .

The strategy of reference: using mental accounting

In addition, a product can use multiple strategies at the same time because consumers may also make multi-faceted comparisons.

The author of this article @康熙师爷 is compiled and published by (Qinggua Media). Please indicate the author information and source when reprinting!

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