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Case Study… Price Bracketing for Instant Profits

by Wynne Pirini on December 20, 2012


What I’m about to share with you is a very simple but powerful strategy for getting an instant increase in profits.

Using this you’ll be able to increase conversions and sales on just about anything.

The strategy is called Price Bracketing.

Now, I’ve been doing this for a while now with great success.

But to honest I never knew this had a name.

I simply called it “giving people options”.

The basic concept is that you offer 3 or 4 options. By offering 3 or 4 options on just about anything you will increase your conversions by a big jump.

By the way, 3 or 4 options seems to be the sweet spot. Any more or less than that will generally yield lower conversion rates. And there’s some psychology that explains why that is… but I’ll leave that for another day.

One important note here – price bracketing must be done correctly otherwise you’ll lose sales, so pay close attention!

For now I want to share a great case study I found over at (article – Pricing Experiments You Might Not Know, But Can Learn From).

Price Bracketing Case Study

Test #1 – People were offered 2 types of beer. A premium one for $2.50 and a bargain one for $1.80.

The result?

80% of people bought the premium beer.

Test #2 – Then a third beer was introduced for $1.60 – let’s call it El-Cheapo beer. (Probably tastes awful.)

What was the result now?

This time 20% bought the premium beer at $2.50, and 80% bought the mid priced beer at $1.80. Nobody bought the El-Cheapo beer.

Wow, did you see what happened there? Sales of the premium beer were slashed as a result of using this method.

(Remember earlier I told you if you do this wrong it will actually cost you sales.)

OK, so there must be an upside to this. And there is.

Test #3 – In the third test the researchers removed the $1.60 El-Cheapo beer and introduced a super premium beer for $3.40.

This time the results were as follows:

Almost nobody bought the mid priced beer at $1.80. Around 90% bought the premium beer for $2.50. And the remainder bought the most expensive beer for $3.40.

The lesson here is that the middle priced option almost always sells the most.

So if you’ve got a product currently selling at $10, the way to get more is to introduce two new options at say $13 and $16.

Simply doing this will shift people’s preference to the $13 without any significant effect on conversions.

Easy huh?!

Leave a comment below and let me know what you think.

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