“Pricing on the 9 is appropriate when what you’re selling is a commodity or near commodity, like I said, but it should not be used, if what you’re selling is unique in some way and where you use the price to message value, message a uniqueness, message a unique value, then you should not price on the 9.” – Per Sjofors in today’s Tip 1446
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Scott Ingram: You’re listening to the Daily Sales Tips podcast and I’m your host, Scott Ingram. Today’s tip comes from Per Sjofors. As a serial entrepreneur, running companies in Europe and the US, he did pricing experiments. Some of these worked spectacularly well, and some did not work at all. As a result, Per founded his company out of his frustration with what business schools teach about pricing. Here he is:
Per Sjofors: We are all familiar with pricing on the 9. You know, 9.99, 99.99, 999.99, and so forth, right? It could also be 49.99, et cetera.
Why is that?
Well, it’s because the way we look at it, as humans, if we look at 49.95, 49.99 versus 50. For us it’s a difference, one is 40 something and the other is 50 something because we just look at the very first number in the price. And so as we look at it, it may be a cent difference, it may be three cent, it may be five-cent difference. But in our minds, not for everybody, of course, but for many, it’s a $10 difference. And that’s why pricing on the 9 works.
But there is a catch with pricing on the 9. If you’re selling something that is a commodity or something very similar to commodity, a product or a service that essentially is very similar or identical to other products or services in your category, then pricing on the 9 is a good strategy. And going from, let’s say, 50 again to 49.99 or 49.95 or 49.97. 97 actually typically give you 3% higher sales volume than 99. So that’s also something to consider.
But pricing on the 9 is appropriate when what you’re selling is a commodity or near commodity, like I said, but it should not be used, if what you’re selling is unique in some way and where you use the price to message value, message a uniqueness, message a unique value, then you should not price on the 9.
So a little tips on how you can get more sales volume by pricing on the 9. And there is a reason why we see it all over the place, and that’s because it works. And it’s been proven that you can gain about up to 20% higher revenues by pricing on the 9.
Now, that doesn’t mean that you sell 20% more of the product or the service that you price on the 9. It means that the buyer spend more money in total, so they may buy other products and they may buy other services that they wouldn’t buy if you didn’t price on the 9. Hope this was valuable. Thank you.
Scott Ingram: For links to connect with Per, and to his book “The Price Whisperer: A Holistic Approach to Pricing Power”, just click over to DailySales.Tips/1446. Once you’ve done that. Be sure to come back tomorrow for another great sales tip. Thanks for listening!