![](https://cdn.prod.website-files.com/6449bd4a26ec4924663eb1fc/667f35822d1a583d54848ef7_Bolt%20(1).png)
Key Takeaways
- Tiered Pricing: Presenting multiple packages at different price points, successfully reduces rejections rates and maximizes client-to-service fit.
- Decoy Effect: Introducing a third, less attractive option can steer your clients towards a preferred choice to increase the appeal of your targeted services.
- Charm Pricing: By simply leveraging the left-digit effect, ending a price with nine suggests to your potential client that this is the lowest possible price and gives the appearance of the best deal they’ll receive.
- Dividing Large Payments: Breaking down large payments into smaller increments enables clients to spend more by making expenses more digestible and manageable.
- Price Context and Framing: When presenting products in a modern digital format and luxury style setting watch how your clients’ willingness to pay a premium significantly increases.
- Scarcity Principle in Sales: See how creating a sense of urgency through limited-time offers and exclusive packages can increase perceived value and drive quicker purchasing decisions.
- Supercharge pricing strategies with AccountGroove: Learn more on utilizing AccountGroove to implement and automate these 6 pricing strategies.
Boosting revenue without extra effort is every business’s goal. Smart pricing strategies rooted in psychology can help achieve this. Learn from these five studies below that demonstrate how simple pricing tweaks can significantly increase your revenue. These proven techniques, from charm pricing to the decoy effect, show how optimizing your pricing model can increase your bottomline with minimal effort.
1. Tier Pricing w/ Price Anchoring
The three-tiered pricing model offers three service packages at different price points, ideally for productized services sold as packages. When offering multiple choices clients are less likely to say “No” when given the opportunity to compare options to find the right fit for their goals.
This value based approach opens room for more revenue unlike rigid pricing tables that limit client options. Once the tiered staging is set, upgrading clients to higher tiers is the quickest way to boost your average revenue per client. Inside the golden rule of 3, studies show that 66% of people will select the middle option, 23% will select the basic option and 11% will pick the premium option.
Businesses utilizing AccountGroove sell through tiers that automate billing phases, from simplified proposals to payment collection and QuickBooks integration. Learn more about Tier Pricing.
![](https://cdn.prod.website-files.com/6449bd4a26ec490e6e3eb223/66e8bc1c306ab624ceff0572_66846713b905a1b8c91d45d5_netflix-pricing-model.png)
2. Decoy Effect
The decoy effect, also known as the asymmetric dominance effect, occurs when the presence of a third, less attractive option,
"The Decoy", makes one of the other two options more appealing. This effect is used to steer consumers towards a preferred choice as seen in the example below.
A study on the Economist pricing model conducted with 100 MIT students displayed that with "The Decoy", 84% of students would purchase the premium packaged as it looks like a better deal and offers significantly more for only $66 and without "The Decoy", 68% of students gravitated towards the low end model. This effect exploits our tendency to compare options relative to each other.
By adding a third option "The Decoy" to their pricing, the Economist subscription would have earned $3,432.00 more than just presenting two options.
![](https://cdn.prod.website-files.com/6449bd4a26ec490e6e3eb223/66e8bec0e1d407b38f7be449_66e8bc5f805a65899a5f1fca_The%2520Decoy%2520Effect-AccountGroove.png)
3. Charm Pricing
A study on pricing strategies conducted at the University of Chicago with the Journal of the Association for Consumer Research found that using prices that end in nine can increase sales up to 20%.
This effect, known as the left-digit effect, occurs because our brains tend to focus on the first digit of a price and disregard the rest. This research demonstrates that prices ending in nine can outperform nearby "rounded" price points, leading to a substantial increase in sales.
Example 1:
Simply raising the price of a service 16% from $2,500.00 to $2,950.00 is more likely to sell through than just raising an additional $50 at $3,000.00.
Example 2:
Apple, selling iPhones at a premium, has master charm pricing giving the impression that the product is tagged at the lowest possible price.
![](https://cdn.prod.website-files.com/6449bd4a26ec490e6e3eb223/66e8bec0e1d407b38f7be45d_66e8bcc5db4be99bc6681b2b_Charm%2520Pricing-iPhone-AccountGroove.png)
4. Dividing Large Payments into Smaller Amounts
As a service provider, dividing large payments into smaller amounts is a financial strategy that can help make large expenses more manageable for their clients. By breaking down a substantial payment into smaller, more digestible chunks, clients can spread out the financial impact over time.
Afterpay, a service that allows users to break a single purchase into smaller monthly increments, says consumers that use its service spend 40% more.
In addition, dividing large payments into smaller amounts opens the door for selling recurring services and various subscription models during an engagement period. Learn more how to structure and implement automatic, recurring services into your pricing model by scheduling a personalized demo.
![](https://cdn.prod.website-files.com/6449bd4a26ec490e6e3eb223/66e8bebfe1d407b38f7be429_66e8bda984a2f8ebad1f79ed_accountgroove_divinglargepayments.jpeg)
5. Scarcity Principle
The scarcity principle, as defined by Dr. Robert Cialdini, a foundational expert in the science of influence and how to apply it ethically in business, suggests that the less available an offer or service is, the more valuable it becomes.
The perceived scarcity creates a sense of urgency, prompting consumers to make quicker purchasing decisions than they normally would.
Clients are also willing to pay more per service because a cost-benefit analysis states that losing out on an offer or service is worse than the money it costs to get it.
Example:
- Offering a discounted price package for a limited amount of time
- Adding a bonus set of additional services for the same price (though already factored in)
- Offering a limited available window for top talent
![](https://cdn.prod.website-files.com/6449bd4a26ec490e6e3eb223/66e8bebfe1d407b38f7be433_66e8be39b0830b63aeb570aa_Source-%2520Marketizator%2520and%2520Conversion%2520XL.jpeg)
6. Price Context and Framing inside a “Luxury” setting
Price context and framing can significantly impact consumer behavior and willingness to pay. According to a study conducted by Richard Thaler, a world-renowned economist and expert in behavioral finance, users were willing to pay 77% more for the same product when it was presented and sold in an elevated environment. This finding underscores the importance of how products and services are presented and the context in which they are offered.
With a digital presence most professional services today are sold virtually. Presenting engagements designed for print formats via .PDF or Microsoft Word creates layers of friction within the sales process and increases the odds of you losing out on the deal.
Accountants and professional service providers using AccountGroove's smart proposals noted that simply switching to a modern viewing experience helped sell through premium packages vs. their traditional engagements increasing revenue by $22k+ annually.
![](https://cdn.prod.website-files.com/6449bd4a26ec490e6e3eb223/66e8bec0e1d407b38f7be459_66e8be7752442a44b8445a80_Percentage%2520of%2520students%2520choosing%2520each%2520option%2520when%2520only%2520two%2520options%2520provided.png)
By employing these principles, businesses can strategically shape their clients' behavior and maximize sales with minimal effort. Embracing these tried and true techniques not only increases immediate revenue, but also positions your business to sustain growth. AccountGroove has helped hundreds of businesses earn more revenue by improving sales efforts with streamlined engagements and automated billing.