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  1. #1
    phpLD Fanatic bronze trophy dvduval's Avatar
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    Arrow Charge More and Sell More?

    I know there have been some cases say with luxury items where simply increasing the price makes the item seem more desirable. Are there any good ways to study how price might affect sales other than actual price changes?

  2. #2
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    ScallioXTX's Avatar
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    I've always thought (and still think) that increasing the price will make you sell less. It's a balancing act. When you sell a product or a service you can either do it cheap to make it interesting for people and sell a lot, or make it more expensive, which will result in making it interesting to less people, and sell less.
    Within a certain range I think the two will give you about equal income. Say you sell 100 pieces of candy for ten cents a pop, you get 10 dollars. Sell 50 for 20 cents a pop you also get 10 dollars.

    Of course when you make something too cheap people won't buy it because they don't believe it. Make it too expensive people won't buy because they can't afford it.

    As for a study, I suppose you could do some sort of survey but in the end you'll probably get the best results by actually changing the price.

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    SitePoint Addict NetNerd85's Avatar
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    The problem with surveys is that people say they will do something a lot more often than they actually do the something in question.
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    It that's what the cases say, the conclusion should raise eyebrows. There are other reasons which might account for the data.

    I thing some cases point to there being more profits at the higher price point. And then, below a certain price point people think something is wrong, so sales drop off.

    In all cases, it is the perception of price within a context driving sales and profits. And people want it to be "just changing the price."

    A much better lesson learned is the distinction between three words: Price, Value, Cost.

    Price is what you pay. Value is what you get. Cost is what you really pay on the way to realizing value.

    That, and the value of testing at a variety of price points. As was said, it is a balancing act. I advise looking to profits to influence your decision making, not gross sales. You may find lower price points, for instance, don't do repeat business -- your least profitable sale usually being your first one.

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    <?php while(!sleep()){code();} G.Schuster's Avatar
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    Quote Originally Posted by ScallioXTX View Post
    Make it too expensive people won't buy because they can't afford it.
    Put an "i" in front of the name, castrate alle the interesting functions, name yourself "banana company" and it sells like hot cakes...even to those that don't have the money, praise loans and financing...

    BTW, I bet those bullsh* pieces of hardware wouldn't sell if they took reasonable prices.
    It's the "I can't afford but alle those others can - I need that thing"-phenomenon.
    If everyone could get it it would be bulk good, which it is anyways, but those slaves don't see that.

  6. #6
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    banana company
    You spelled Apple Computer wrong.

    That's the common view. Anyone can be Apple if they just raise prices. It's wrong, and the market plays that out time and time again with every iWhatever Killer that never killed anything but itself, but that is the view.

    Enjoy your Microsoft Kin. Did I say Kin? What I meant to say was Windows Phone 7.

    Kin was (past tense) was a hipster phone with premium pricing. That's your "case."

    The Kin phones were too pricey from the beginning. They weren't exactly smartphones, but they were priced like one. ...Plus, the Kin OS had no apps or maps, and paired with a price tag too steep for its target audience, the Microsoft Kin was pretty much dead on arrival.
    -- Microsoft's Kin Phones Were Destined to Fail
    Apparently Kin had too much interesting functionality to succeed. Maybe they just didn't raise prices high enough.

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    SitePoint Addict NetNerd85's Avatar
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    Here's an interesting article you might find useful or amusing: 5 Ways Stores Use Science to Trick You Into Buying Crap
    a new day, a new beginning
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  8. #8
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
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    This is a simple question with a complex answer. It depends on the type of product/service and a bunch of other factors.

    With some products, price point is correlated to sales very closely and raising prices doesn't change the perception. With others, price makes a big difference.

    I know that in certain types of consulting practices, raising your rates can increase your attractiveness to clients who are seeking premium services. That was worked for me in some circumstances.

    Then you have things like OTC medications. Many people will buy more expensive name-brand versions of a medication because of the perception that it's better or safer. And lots of people will pay more for something with the same ingredient because it's labeled differently - i.e Excedrin vs. Excedrin for Migraines (essentially the same thing).

    Then there are services where people just consider price,which is becoming more and more typical online.

    Yes, there are lots and lots and lots of studies and research papers on these matters. But, none of them will answer the question 'is it better to raise prices' because it's to vague.

    In the category of luxury items, I assume its much more common for higher prices to result in better sales. In a luxury resort that I have worked with before, they have had the same rental homes going under two category 'standard' and 'deluxe' with the deluxe costing quite a lot more.The deluxe sold out first, but this was a very specific product being sold to a very specific demographic.
    The fewer our wants, the nearer we resemble the gods. — Socrates

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