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The Sales Buzz Issue 318 - Sales Price Viewpoint-When 5 is Higher Than 6
June 01, 2016
Sales Price Viewpoint
When 5 is Higher Than 6
The sales price viewpoint of customers often defies logic which makes it difficult for you to see how a customer sees your prices.
You, like me, as a sales person, will see a product costing 6 £s, $s, or €s, as more expensive than one costing 5.
But not all customers see it that way.
I’m spending a month in Lanzarote, an island of the African coast associated to Spain.
On a local market I looked at the pricing, observed the buying actions of the tourist, and spoke to some of the sellers.
The outcome gave a fascinating insight that proves you can’t just assume your customers’ sales pricing viewpoint will follow your logic. Here’s an example and an idea for you to consider...
Unusual PricesAlmost no items on the market were priced at €5. More surprisingly, there were no items at €4.99 or any other figure just below €5. The most common price for smaller items was €6.
This didn’t follow my sales price viewpoint logic. Back home, or online, you would see prices of 4.99, or the newer version of a retail sales price below a unit of 5 but very close to it, of 4.74.
I watched, observed buying actions, and later spoke to some of the sellers. Here’s what I discovered about the logic behind the pricing.
Sales Pricing Viewpoint When 5 is More Than 6Tourist have very little change, any loose change they have they keep for tipping waiters and coach drivers.
And if they’re not used to the local money, sifting through change to find 1s and 2s and pennies or cents is awkward.
When they buy they use a note. In the case of the goods on the market they used €5 and €10 notes. If a tourist spends a €5 note they don’t get any change, the whole note has gone.
The very fast mental pictures the tourists make, while making a buying decision, are of a whole note being handed over.
When the price is €6 the internal pictures and thought processes are different. A €10 note is handed over but they get €4s back. €4s is no longer just loose change, it’s almost €5, and the tourists sales price viewpoint, as illogical as it might seem, is that they have a big chunk of a note back after making the purchase.
The Double Sales Price TechniqueOn every stall, where the price for 1 item was €6, the price for 2 was €10. No exceptions, every seller had the same pricing for 2 items.
No prices of €9.99, no buy one get one free, and no complicated special deals. The price is simple and straightforward, a €10 note, which is easy to get out of a pocket or wallet in a busy market.
And in the minds of the buying tourist, it’s just €4 more than buying 1 item for €6. Those €4 coins that they would have got back in change will get them another item, and that item is worth €6 so they are making €2, what’s not to like.
Learn the Sales Price Viewpoint of Your CustomersThe real example I’ve used is for a specific sales situation where market vendors are selling to foreign tourist. It should not just be copied blindly, that’s not why I’m presenting the ideas to you.
If the vendors were selling to local people they would have refined a totally different, but just as effective, pricing structure for their goods. They are using a pricing technique that works for them in a specific situation.
What I suggest all sales people, small businesses, and large organisations, do is to look at how they present prices to their customers.
Do you know the thought processes your customers make when deciding whether to purchase?
Should you be presenting a simple pricing structure, like the market vendors do?
Or should you use complicated pricing like mobile phone companies do to confuse their customers?
Put yourself in your customer’s position and go through what they will be thinking while making a purchasing decision.
How do your customers see your price, just below a big number, a whole amount, or a saving with change?
How do you charge for multiple items, and how do customers view that?
In some industries a price above a certain amount requires authorisation from someone high in the hierarchy, are you just over this threshold?
Add this technique to adding value to your sales offer and you create a powerful offer that will increase sales.
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I'm Stephen Craine from the website Sales-Training-Sales-Tips.com
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