Pricing Psychology In Ecommerce Subscription Models

"Is $20/month too much for our product?" Instead of guessing, we used the Van Westendorp method to find our pricing sweet spot. 4 questions revealed exactly what users would pay (and we haven't touched our pricing since). Here's the framework any founder can steal: 1. Send a survey to actual users, not prospects We surveyed people already using Gamma. They understood the real value of our product, not hypothetical value. Too many founders survey their waitlist or randomly select people who have never used their product. That's like asking someone who's never driven about car prices. 2. Ask these 4 specific questions - At what price would this be too expensive for you to consider it? - At what price is it expensive but still delivering value? - At what price does it feel like a bargain? - At what price is it so cheap you'd question if it's reliable? These create bookends for perceived value. You're mapping the entire spectrum of price psychology, not just asking "what would you pay?" 3. Plot the responses and find where the lines intersect Graph responses from lots of users. Where "too expensive" and "too cheap" lines cross: that's your acceptable range. Where "expensive but fair" meets "bargain": this is your optimal price point. 4. Test within the range, don't just pick the middle The intersection gives you a range, not a number. We ran pricing experiments within that range to see actual conversion rates. A survey shows willingness to pay; testing reveals actual behavior. 5. Lean towards generous (especially for product-led growth) We chose to be more generous with AI usage than our "optimal" price suggested. Word-of-mouth growth matters more than maximizing initial revenue. Not everything shows up in the numbers. 6. Lock it in and stop tinkering Once you find the sweet spot through data, stick with it. We haven't changed pricing in 2 years. Every month debating pricing is a month not improving product. Remember: pricing is a signal, not just a number (Image: First Principles)

A pricing strategy every subscription business should know 👇 The Van Westendorp Price Sensitivity Meter You don't have to use any fancy techniques or technology to validate your subscription pricing —these 4 questions will provide you with a lot of insight into the right price for your offering! 1/ At what price do you think the product is priced so low that it makes you question its quality? 2/ At what price do you think the product is a bargain? 3/ At what price do you think the product begins to seem expensive? 4/ At what price do you think the product is too expensive? You can leave the answers open-ended or provide ranges from which to choose. You can do it qualitatively, so you can hear the thinking, or as a survey. You can also compare the responses you get from qualified prospects vs. existing customers you might be trying to convert to your new offering. If I were doing this live/qualitatively, I might add a question at the end like, "If I offered you early access to the subscription at the price you described as 'a bargain,' would you sign up right now?" This lets you see if people are just trying to be nice or are telling the truth. By understanding how your target audience perceives price in relation to quality and value, you can make informed decisions to optimize your subscription pricing strategy. +++++++++++ 👋 I'm Robbie, I'm a consultant, author, and speaker covering all things subscription businesses. +++++++++++ 🛎 Tap the bell under the banner on my profile to catch the next post. ++++++++++++

"You're too cheap to be good." A lost client's final words before ghosting. That feedback blew my mind at first, but then I realized The brain sees low prices as danger signals I lost 80% of deals by pricing too low. Then brain science fixed it. What your brain needs to know about pricing psychology: Most think higher prices scare clients away. Science says the opposite is true. Your brain actually devalues what comes cheap. 7 Psychological Pricing Secrets of High Earners (use without being manipulative) 1/ Status Activation Cheap prices trigger survival mode. Premium prices activate achievement centers. Do This: ↳ Price slightly above market average ↳ Highlight exclusivity over accessibility 2/ Anchoring Effect First number sets the brain's reference point. This doubled my close rate instantly. Do This: ↳ Show premium tier first ↳ Compare to higher-cost alternatives 3/ Pain-Pleasure Switch Price resistance is really fear in disguise. Understanding this tripled my revenue. Do This: ↳ Address money fears directly ↳ Frame price as investment, not cost 4/ Value Stacking Multiple benefits beat single features. This turned my $2K offer into $20K program. Do This: ↳ Bundle complementary services ↳ Show combined value before individual pieces 5/ Scarcity Signals Limited spots trigger loss aversion. This works because brains hate missing out. Do This: ↳ Cap enrollment numbers clearly ↳ Set authentic registration deadlines 6/ Choice Architecture Too many options paralyze decision making This simplified my offers and boosted sales. Do This: ↳ Offer exactly three tiers ↳ Make middle option most attractive 7/ Risk Reversal Safety signals unlock the buying brain. I use this to remove final resistance. Do This: ↳ Offer strong but simple guarantees ↳ Show proof before they ask Smart Tips: ↳ Test one trigger weekly ↳ Track client objections ↳ Let pricing evolve naturally Truth is: Pricing isn't about the number. It's about the value story your brain tells. Master this, and you'll never discount again. P.S. Which pricing trigger resonates most with you? Let me know in the comments ⬇️ ➡️ Master the psychology of pricing here --> https://lnkd.in/gMcXA2-Y ------------------------------------------------- ♻️ Share to help others price with confidence. ➕ Follow Shannon for more brain-based biz growth.

7 Pricing Psychology Principles That Actually Work: Columbia, MIT, and Stanford research revealed these counterintuitive pricing truths: 1. Center Stage Effect: ↳ Most tech companies accidentally sabotage their best plan. ↳ Position your target pricing tier in the middle of all options. 2. Loss Aversion Framing: ↳ Stop telling customers what they'll gain. ↳ Frame messaging around revenue lost without your solution. 3. Strategic Decoy Pricing: ↳ The pricing tier nobody buys that doubles revenue. ↳ Add inferior option that makes target tier irresistible. 4. Annual Pricing Psychology: ↳ Why 69% of top software companies lead with annual pricing. ↳ Display annual plans as monthly costs with billing frequency. 5. Value Metric Alignment: ↳ The pricing mistake that ends subscription growth. ↳ Price based on metrics that increase as customers get value. 6. Price Anchoring Effect: ↳ The highest-priced plan most customers never buy. ↳ Lead pricing pages with most expensive tier to set anchor. 7. Cognitive Load Reduction: ↳ Why Groove's 350% conversion boost shocked everyone. ↳ Limit total pricing options to maximum 4 tiers. Pick one principle and test it this quarter. The companies that act on pricing psychology compound their advantage monthly. Which principle have you applied most successfully at your company? ♻️ Enjoyed? Repost for others to find. 🔔 Follow Ali Mamujee for more growth & monetization content.

Most marketers obsess over getting more traffic to their offers. But what if the secret to more revenue isn't getting more people to your page... But changing how you structure your pricing once they're already there? That's exactly what The Economist discovered when they implemented a psychological pricing strategy that instantly increased their subscription revenue by 43%. The best part? You can implement this same strategy in your business today with zero additional ad spend. Here's how they did it... The Economist originally had two subscription options: 1️⃣ Web-only: $59 2️⃣ Print + Web: $125 With these options, 68% chose the cheaper web-only subscription. Pretty standard. Then they added a strategic "decoy" option: 1️⃣ Web-only: $59 2️⃣ Print-only: $125 3️⃣ Print + Web: $125 Notice something interesting? The print-only and print+web options are the SAME price. But one clearly gives you more value. The results were mind-blowing: 📊 Web-only dropped from 68% to just 16% 📊 Print-only: 0% (nobody chose it) 📊 Print + Web jumped from 32% to 84% Their average revenue per customer surged from $80 to $106, which was a 32.5% increase from adding one strategically designed option. This is the "decoy effect" in action. It works because our brains don't assess value in absolute terms but through comparison. We see this everywhere once you start looking: For example, movie theaters do this with popcorn pricing (noticed how the medium is suspiciously close to the large?). Here's how to implement this in your business: 1. Identify your premium option (highest profit margin) 2. Create a slightly inferior option at the same (or higher) price 3. Keep your entry-level option at a lower price 4. Display all options side-by-side Remember that your customers aren't buying your product…they're buying the difference between your options. That's why The Economist's strategy works so effectively. They engineered a pricing structure that makes the highest-value option feel like an obvious choice. Stop trying to convince people your product is worth the price. Instead, restructure your pricing so your premium offer becomes the obvious choice through comparison. P.S. Comment "Brain Hacks" for a free sheet with 81 of the most powerful cognitive biases you can implement in your marketing to increase sales!