In the short time that I’ve been playing the ISV game, I’ve had many an opportunity – and necessity! – to think about pricing. As it turns out, finding the right price for your software is tricky business. Many articles have been written, much virtual ink has been spent on discussing various strategies. There’s even a (short) book!
While there is no silver bullet for pricing, there are some techniques and tweaks that are pleasantly simple. Here’s one that I stumbled upon recently and wanted to share with you: when in doubt, pick the most common price.
The reasoning behind this idea goes something like this:
- People don’t read the whole price tag at once. Instead, their brains process the price digit-by-digit, subconsciously trying to guess what the full price might be. As soon as they see the first digit they already have a working hypothesis on what the second one will be, and so on.
- If their guesses are correct, they will feel that the price is “right”. If they’re off even by a few cents, they will experience a subconscious sense of “wrongness” which can make them reconsider buying your product.
- Therefore, you should usually pick a common, familiar price point that people will be able to guess easily.
Side note: This also makes a lot of sense in the context of the popular “don’t make me think!” design guideline. Familiarity eases decision-making. If your potential customer has already bought similarly priced products in the past, they will be able to evaluate your offer more easily and quickly, instead of going through the whole “do I really need this widget?” thing.
So how do you find out which price is the most common? There are a couple of databases that offer this information, but most of them cost money. Luckily, there is one huge database that all web users can access without paying a penny.
I’m talking about Google, of course. If you do a Google search for “$19.95”, the number of results will provide a rough estimate of how common that price is. Do this for all the dollar amounts in the range you’re interested in, sort them by the number of results, and voilà – there’s your optimal price point.
Better yet, use the database I’ve already compiled. It includes the number of Google search results for every price point from $0.01 to $99.99. Not a silver bullet, but if you’re dithering between $4.95 and $4.99, this might be just the thing.