Understanding how brides to be think is crucial for the financial health of any wedding related business. This article will analyze the pricing cues as well as the triggers that determine brides to make decision purchases. For most couples, the perception is in fact reality and can make the difference between a purchase and defecting to a competitor. Often sending the right pricing signals as important as slashing your prices.
High Pricing Cues
Research shows that the fancier the showroom of the wedding professional, the more the brides think they will overpay for products and services. As such, if you want to compete on price - and we never endorse that - make sure you project the image of a thrifty vendor.
For example, the New York wedding photographers' prices will be perceived as high if she has a large studio in Manhattan with a lot of staff, offers sample albums, large metallic prints with images that capture emotions, serves free coffee to every couple that makes an appointment. That could be an amazing thing if you are trying to build a high end brand, but if you run a discount business, you need to be careful about your image.
Many Weddings Means Lower Costs
Among the most important cues to a bride is the perceived business volume. We have been educated to believe that large box stores have better prices than boutique shops and this thinking also applies when it comes to the wedding photographers, planners, videographers, makeup artists, and other professionals.
As human beings, we were ingrained the concept of economies of scale and see large enterprises as more cost effective.
Unique Services Costs More
A wedding photographer who takes cookie cutter photos will charge average prices, but one who employs new techniques (sparklers, smoke bombs, low shutter speed, fog, etc) will definitely be able to charge premium prices. Brides are willing to pay extra for uniqueness. After all, on the best day of our lives we are not going to be cheap! That magic large photo print will make the couple re live
The Price is NEVER Right
A survey done in a big box store showed that customers have NO IDEA what the price of an item was. How was this interesting piece of research run? Employees of the research firm asked shoppers in several supermarkets how much different products in the shopping cart cost. Less than 50% knew the correct answer. Even more surprising, about 20% of the customers interviewed had no idea how much the products in their cart cost.
If you ever watched the price is right (by far our favorite show), you can see that contestants have no clue about the prices. The margin of error for many of them is more than 50%.
Our point? Don't be afraid if you don't know what your prices should be! Nobody knows! Pricing is an art and a science and nowadays even pricing managers have trouble managing the complexity of multiple channels' pricing.
Customers make pricing decisions based on gut feeling and cues, not on market knowledge.
When we go to a brick and mortar store, we often check their competitors' websites to make sure the pricing is not out of whack! Even Google recognizes the existence of comparison shopping and created google shopping. A pricing search engine? You would expect everyone to know about it. Interestingly enough, only 5% of all the people we interviewed knew about Google Shopping.
Sale signs are the pinnacle of demand generation. Research shows that a SALE sign can boost demand by over 50%! The explanation of this phenomenon is a bit more complicated, but please bear with us.
Your left brain is more analytical (sorry left brain!) and makes all the purchasing decisions. Often it is called the digital brain as it is an expert in computations.
When we see the SALE sign, our right brain takes over and ruins all the work of the left brain. Reference prices don't matter, budgets are forgotten, we become shopping beasts who have to have that deal!
Why do we always react to sale signs? Because they are true most of the time. The rare instances when a sale sign is misleadingly used are very rare and don't change our perception of sales signs fairness.
We, the customers are not stupid! We all know those stores that display Store Closing Sale signs to attract bargain shoppers but are always empty.
Please note that misusing sale signs is illegal and we definitely do not endorse it! As a rule, deceptive pricing and packaging are punishable offenses.
However, if business is slow, you might want to consider slashing your prices and announcing that to the whole world (we mean through social media, friends, clients and family.
Limited Time Offer
Another trigger of the purchasing decision is the idea that we will miss out. Nowadays this is called FOMO (Fear Of Missing Out) and mostly refers to teenagers who guard their phones with their life for they might miss a posting that will change their life!
According to our research, when you add the expiration date to the offer, the conversion rate (number of brides who buy divided by all brides who visit your website) increases by 56%!
How come that we are so sensitive to the "limited time" trigger? Well, the homo sapiens evolved over hundreds of thousands of years and we often oscillated between periods of plenty and famine.
During the summer, our gatherer ancestors were finding food galore, but in the winter, many of them starved to death. The ones who survived, knew the value of saving for the rainy day and that the bonanza will last for a LIMITED TIME! As proud descendants from the smarter monkeys, we know that foregoing a good opportunity can make the difference between life and death, hence Limited Time Offer alone can make us buy a product or service!
Others Bought It!
"Once the herd starts moving in one direction, it's very hard to turn it, even slightly." - Dan Rather
Imagine you were a sapiens chased by the saber tooth tiger. Everybody in your tribe jumped in the ocean and escaped the big bad tiger. It is your turn now....are you going to jump? D'oh! Yes! Otherwise you will perish!
The wisdom of the masses is a real phenomenon: when asked how heavy a piglet was, nobody was able to precisely guess its weight, but the average of all answers was always accurate with a 1-3% error margin!
As such, as a crowd, we are super smart, though some of us are not the brightest bulbs in the box. When we are told others have bought it, we always refer to our ancestors who survived by following the heard and we buy, buy, buy baby!
The Magic of Golden Prices Ending in 9
Many retailers use prices ending in 9 for discounted products and research shows that displaying such prices increase demand by 8% all things being equal.
The Sale sign used in conjunction with the golden price have a lower impact on customers' decision to purchase. As such, to maximize volume, use either the sale tag or the psychological price ending in .99 but never both.
Reference Prices for Basic Items
We use reference prices to distinguish between cheap, average and expensive vendors or stores. For example, most shoppers know the prices of milk, bread and eggs and based on those prices they categorize the store as budget or high end.
Still, retail pricing managers do lower the basic products' prices to create the impression of discount across the board. We are looking at you Walmart! While in many the products in the reference basket (basic products) might be aggressively priced, the vast majority of products are more expensive than those of competitors and we have no way to know that, unless we do online comparison shopping.
Many retailers discount high volume products and services to drive traffic to the store, only to overcharge for the rest of the products they sell.
That technique is called "loss leaders" and it is not encouraged by the manufacturers of the "leader" product as it devalues it.
Regular Prices Gimmick
Often, as customers, we question the original price of a particular product or service. We see the sign 50% off and we ask ourselves...50% off what price? Was the original price fair or it was artificially inflated so that we bite the bait and make the purchase.
For example, two New York City photographers sell their identical package for $5,000. One launches a promo stating you will get 20% off if you buy by the end of January (the month when most couples shop for wedding vendors - that is why most bridal shows happen in January). The second photographer raises his prices to $7,000 and promotes a 40% off promo.
The truth is that photographer number B will experience an increase in demand greater than photographer A yet photographer B's packages are more expensive than those of photographer A.
Is that technique ethical? Absolutely NOT! Is it legal? In some parts of the world...maybe.
Lowest Pricing Guarantee
Many retailers guarantee a low price, but our question is this: how many people form the pricing team so that the company can monitor competitor's prices...it is virtually impossible to beat everybody's prices in all categories. Period! As such, the lowest price guarantee is totally misleading.
However, a study done by University of Maryland showed that the pricing guarantee policy contributed to an increased confidence the retailer offered prices below those of competitors.
Low Pricing and Purchasing Decision
If a retailer claims an Every Day Low Price, we are more inclined to relax and buy with the confidence that we are getting amazing deals, though that might not always be the case. Are we right Walmart?
Pricing Guarantees Lead to Higher Prices
Studies done by University of Houston and University of California show that the pricing guarantee reduces price differences between competitors. Even more important, the research shows that the price levels increase when pricing guarantees are in place!
Another of our favorite pricing tricks is the price matching policies. Arguably it saves customers money, but how many clients do their homework and comparison shop?
Wouldn't it be better if the pricing team actually matched competitor's pricing on a regular basis?
is If a vendor already offers a low price, there is no need for price matching policies. Be careful when you see the price matching guarantee sign in the big box stores.
Good Luck Enforcing Price Matching Policies
The price matching policies have such a long small print that they are often hard to enforce. One of the most common tricks is to sell products slightly different from those of competitors. If the product is not identical, the price matching policies do not apply. As a side note, many manufacturers create products only sold in large retail chains for that specific reason: to avoid price matching issues.
Price Matching and Price Wars
Many pricing specialists agree that price matching policies are designed to support prices and avoid pricing wars.
The price signaling message is: "If you drop your prices I will match them and we will all lose. We are better if we keep our prices untouched." Genius! Evil genius!
In Bed Together
Are you sitting down? According to a source working at one of the largest retailers in Canada, the retailers submit pricing information to an independent company who then sends daily pricing reports so that pricing managers can assess if their price is competitive or they need to make any moves.
The fact that many couples trust pricing cues allows wedding professionals to deceive clients. However, that would be the wrong move because truth has the bad habit of resurfacing. In the long run, only trustworthy vendors who take good care of their clients and provide an amazing value survive and thrive!
How Consumers Understand (and Misunderstand) Pricing Cues, April 2015, Harvard Business Review
"Low Prices Are Just The Beginning: Price Image in Retail Management" by Ryan Hamilton and Alexander Chernev
The Psychology of Persuasion by Robert B. Cialdini
Pre-suasion by Robert B. Cialdini
Mind Your Pricing Cues by Eric T. Anderson and Duncan Simester, Harvard Business Review, September 2003