Is It Smart to Lead With Price?

What works best? Selling product benefits, then revealing the price? Or revealing the price, followed by selling benefits? There are rarely absolute answers, and statistically valid A/B testing in a direct marketing environment will give you the answer that works for your situation. Still, findings of a new study as I share in my blog at Target Marketing suggest five ways for direct marketers to reveal price.

Neuroscientists and professors from Harvard Business School and Stanford University conducted a study to see if considering price first changed the way the brain coded the value of the product.

The focus on the research was on brain activity when the participant saw the price and product presented together. They were most interested in the area in the brain that deals with estimating decision value (the medial prefrontal cortex), and the area of the brain that's been called the pleasure center and whose activity is correlated with whether a product is viscerally desirable. This pleasure center is called the nucleus accumbens.

Fundamentally, the research indicates there are differences in how a person codes information, based on whether the product has a greater emotional attachment, or whether the product was more practical.

They found that brain activity did vary in the sequence of product versus price first. A conclusion of the report is that when the product came first, the decision question seemed to be one of “Do I like it?” and when the price came first, the question seemed to be “Is it worth it?” Three other points made in the research suggest that showing price first can make a difference:

•    The order of price or product presentation doesn’t matter when the product is desirable and easily understood and consumed (e.g., movies, clothes, electronics), and fulfill an emotional need. If the product is affordable in this instance, then it’s an easy decision no matter how price was presented.

•    When a product is on sale or bargain-priced, showing price first can positively influence the sale.

•    When the product is practical or useful (more than emotional) showing price first prompted participants to be significantly more likely to purchase a product.

“The question isn't whether the price makes a product seem better, it’s whether a product is worth its price.” said Uma R. Karmarkar, one of the research authors.  “Putting the price first just tightens the link between the benefit you get from the price and the benefit you get from the product itself.”

For direct marketing, copywriting formulas often dictate that the price comes toward the end of a sales message, after the product has been presented—particularly in letters and longer-form copy. This study suggests an A/B test of revealing price first is in order.

If you are going to test revealing price first, here are five positioning ideas:

1.    When a product is on sale, prominently show the price. Use dollars, not percentages. Percentages aren’t easily calculated in the mind (or worse, they are miscalculated in the mind and you risk losing a sale).
2.    Incrementally break down the price. Show it as the cost per day, cost per use, or some other practical way to reveal increments of the price.
3.    Compare the price to an everyday item. One of my most successful direct mail packages included a letter with a headline that said, “For about the cost of a cup of coffee a day, you can have….”
4.    Compare to your competition. If you have a price advantage, show it. If you don’t, then compare at a different level that includes longer product life, more convenience, or other benefits.
5.    Position the price presentation as a cost of not buying now.  In other words, show how the price could increase in the future, or the loss that can happen by waiting. This positioning also creates urgency.

It’s important to acknowledge is that the research didn’t study emotion-based long-copy with storytelling and unique selling positioning of the product. Using emotion, story and a strong USP before revealing price in a direct marketing environment may be more effective to sell your product. Every situation is different. The only way to conclusively know if revealing price first will generate a higher response than presenting the sales message first is to A/B test.

Comment /Source

Gary Hennerberg

After a lot of years in marketing and sales, this is what I know works:

Stories sell. Think unique. Stimulate emotion. Close deals. And here are a few other gems from my new book, “Crack the Customer Mind Code.” Know the persona, interpret your offer and let your prospect give themselves permission to buy. That’s how the brain is wired. It’s how people think.

What else? When I’m not breaking down complex topics (or ones marketers over-complicate) into easy-to-grasp stories that sell, I crunch numbers. Manage projects. Write. Teach. Lead.