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July 19, 2019

Pricing Psychology with Paulina Masson

Pricing Psychology with Paulina Masson of Shopkeeper.com 

Pricing psychology – is there a simple rule of thumb or complex?

Pricing psychology can be somewhat complex.

The biggest first thing to say about pricing is to keep it simple!

If you make price plus discount hard to calculate that puts buyers off

Think of $20 price plus $3 coupon

Two options on amazon

  • Round $ amount
  • %age off

Paulina usually uses amount, but if high price point, give % off

It’s easier to calculate.

Testing of Price vs. Coupon

Which converts better?

$21 product plus $3 coupon

  1. $21 product plus $4 coupon –

The $20 offer works better. Why?

PM believes that if it is a multiple of 21 (trained with multiplication table) we calculate discount quicker.

Using Split Testing to Determine Price Points

Most split testing on Amazon is not done well.

PM wouldn’t recommend it for the most thing unless you have a consistently high volume on top sellers in a short time.

Why not? Statistical significance

Statistical significance is needed! 25 sessions are not enough.

Other things change: PPC gives waves of traffic so you’d need to turn it off.

Seasonality is strong- and festivals eg the Cinqo de Mayo

Split testing for a week

PM runs like this:

One price for two weeks (tools online calculate statistical sign)

  • Put the number of sessions – CVR wanted – tool gives statistical significance
  • 500 views a day, want 15% CVR (have 12% at the moment )
  • the tool tells you to run for

Did a whole year of split testing.

Split testing is hard – decide price more by your reading of the marketplace

Mostly on Amazon, we are competing on price – you can’t split test luxury

Overall supply and demand.

Split testing big differences will show up – but small differences a harder to work out.

Pricing Psychology Tricks: Strategies in Picking the Right Pricing

Why use .99 in end or .97?

$29.99 vs $30 – we all read left to right so “twenty-something” implies it’s cheaper

Also, we started equating “$0.99” to bargain and also low quality.

If you’re positioning the product as a luxury product for the spontaneous buyer. Eg $28 vs. $27.99.

It’s a differentiation point.

$0.97 vs. $0.99 vs. $0.79 probably doesn’t make so much difference.

People will still read it as “twenty-something”  – it gives extra work for the consumer’s brain.

Plus you make more profit.

Odd numbers vs. Even numbers

Because we are so conditioned to $x.99 – we are conditioned to feel that odd numbers

Even numbers give more of a luxury feeling eg $22

Odd numbers give more of a bargain feeling eg $21

What does the Shopkeeper app do? 

It’s a gross margin calculator but more of a business dashboard.

You can decide what the key things are going to be for you to focus on.

It’s designed to be very quick and easy to see P & L by profit line.

You can then dig into more and more complexity

amazingfba.com/shopkeeper redirect to an Affiliate link

Very nice deal – most software gives 30-day free trial.

This has 6-month free trial to analyze data and explore the tool.

If you’re a beginner, you can’t usually afford tools like this – but this is a huge opportunity to get to know the tool.


Most apps give a 30-day trial

But Paulina is offering 6-month free trial


What is your one tip for a serious seller on pricing?

Make a task to simplify your pricing.

Simplification is the key to getting better conversions.

It’s the key to making more money. You don’t have to raise prices.

You can raise your click-through rate. This translates to more traffic from Amazon.



Michael Veazey 0:04
Okay, so we’ve let’s get on to the psychology. So we’ve touched on it a little bit, particularly with the methodical versus the spontaneous buyer. So is there any sort of big picture psychology that drives pricing? Is there any overarching psychological principle? That’s a rule of thumb? Or is this sort of a complex topic with various different bits in it

Paulina Masson 1:14
is a complex topic with it? Is it from business? Yes, it is very complex topic. And I definitely the strategies that I can mention here are the ones that I picked up from other fields, you know, so and what works for me and what interestingly, are synced very well with the people I discussed this with. So um, maybe the biggest first thing that I would say about choosing the pricing the digits in your pricing, is don’t make it too complicated. You know, if you make 2179 is the price, and then you save 15% off with the coupon. And now you’re sitting and thinking as about 21 cents, okay. 15% 10% is about to lose 4% will be about 123. Look how long it takes me to go into them. So basically, me as a buyer, I will just squint my eyes and very likely to move on from that listing, not even wanting, you know, when it’s not easy to comprehend your price and the discount together, then you will lose the conversions on that, you know, people just move on, if you give something easy, like $21 price, and $3 off, you know, it’s so quick that you can immediately comprehend Oh, cool, I’m being economics, right. So like, instead of complex process, try to look at all of your prices, what you have in combination with the coupon, either amount, or the percentage, and then try to make them as simple as quickly as possible. There is no two options on Amazon, there’s around dollar amount, or a percentage that you can choose. So me personally, I always choose the dollar amount. But you could choose the percentage, if you are selling higher priced items like if it’s price over $100, then the percentage may seem more significant psychologically, when you’re giving percentage of it appears to be more significant, but maybe not on the very small items like $21 in all, and then it’s it’s a little bit pointless to use the percentage of I would an easier to calculate the round amounts. You know, like I said, $21 price, and $3 off is easier to calculate again, going back to the simplicity of it. There’s another thing I will mention very curious thing. Imagine to price the same product that you have picked one in your mind of your products. Let’s say the price is $21. Now, I will ask your question. Now you will create a coupon today. So should you give $3 off or $4 off from 21. And you will probably say, I’m going to get $4 off because it’s a higher amount, right? So it’s going to convert better like which one will convert better $3 off for for those of you will say portals gonna convert better because it’s a higher number. Actually, no, in my testing $21 price and $3 off converts better. And I started digging and thinking why Could this be right? Why is it converting for me better than the other one. And I have done two years of testing on this split testing on this pressed split testing is another big topic is soo very, very hard to do the split testing properly would significance and all these things. So from my little sample size, I just noticed this one is better why this could be and psychologically, it’s like that, when we were kids, we were all taught this multiplication table, you know, one time seven, the seven, two times seven is 14, three times seven is 21. So if you offer the coupon amount that equally divides from 21. So it’s a multiple of 21. In that case, our calculation and mine because we are so trained with the multiplication table, since we were kids, we are easier and quicker calculating that discount. So comprehension again, of the discount is quicker if you use the multiples. So look 21 is the price and $3 off. So I just get 18. But if 21 and $4 off, okay, so one to the side, then minus 317. See extra takes me to calculate that discount for the $4 off. So that extra step again loses you conversions you also the easier just with one glance with skimming you can count just comprehend $21 $3 of being at a very, very quick, that is amazing effects. So try to always use multiples, when you are deciding what number to put what digit to put there for the coupon code.

Michael Veazey 5:48
Okay, so actually said that three $3 coupon off the 21, which was so the two off just to clarify, again, the two offers were what which word vest says $21 profit you see this is you’re exactly right about pricing, you have to keep it simple, right? I’m struggling here myself, which is an idiot.

Paulina Masson 6:08
So both both at $21 on both sides, right. So same product $21. But should you give $3 off of $30 off, you should do three levels off, because it’s a multiple in 21. And four is not easy to divide the ball. So you are going to have harder time to calculate how much you’re going to be paying in the end. It’s just shows how how right you just proven,

Michael Veazey 6:32
you proven How important is to keep it simple because I heard you say 21 in $21 product price for dollar coupon, I just assumed that you went Oh, we’re giving the same discount. So I put in $20 product plus $3 coupon you know myself in my head, I made an extra step, which you didn’t say because it made sense. And so that’s the sort of thing people do when they shopping on Amazon swiftly. Right, they will make assumptions because they’re in a hurry. And I think you’re right that actually this is just an example of simplicity is incredibly important. We forget this because we spend so much time in complexity, we forget that our job is to work in complexity to provide extreme simplicity for the shopping experience. So yeah, thank you for that reminder. And I’m just proving it myself by getting it wrong. Because really fascinating that people will actually buy a product for less money. And I couldn’t agree more than having, you know, when you speak to the average person, sometimes not Amazon sellers, who you know, they’re obviously highly numerous, but most people can’t calculate mass. If you you know, their life depended on it, at least in the UK, maybe it’s different in Turkey or, or Canada or, you know, Lithuania or different places. But that’s certainly true here. So I wouldn’t want to risk my business on the ability of somebody who can calculate percentages. So I agree that we have to make it really simple. But it’s amazing how strong that is, from your proof there. So now you mentioned split testing. And I think we ought to talk about that. Because all of these things, this is a bigger picture topic, if you like all of these things are based on research of some description and experiment. And split testing is obviously a great tool for experimentation. Tell me how you use split testing to determine price points.

Paulina Masson 8:07
So I briefly mentioned that I did run split testing, but it took me a few years to that. Well, most split testing on Amazon, I will honestly tell you is not so easy to do. And I wouldn’t even recommend for I don’t know, for a very long time only for the best sellers that have a really high volume, consistent high volume in a very short amount of time, only then the split testing will work. Why all because you need first of all, you need statistical significance for the test work, right, you can just have five sales a day, and then you know, you will just have 25 sales and total to look at and you can’t judge from that few sessions on the listing, you know, if you’re going to have 500 sessions, and then 25 conversions is not enough data to have a serious decision, whether works or this doesn’t work plus on Amazon, there are other things affecting it, right. So for example, PPC, you’re running and it goes demand and supplies there, right. So you have to switch up your PPC when you’re running a proper split test to not affect it, you know, otherwise, you will get waves of traffic due to PPC and then again, you cannot properly calculate anything. So things like seasonality affected strongly, you know, it could be Cinco de Mayo, you will not even know about you know, and they buying your product more, or maybe it’s the weekend and the moms are shopping on the weekend, I don’t know. So things like that even can affect it. That’s why you need really high volume product that you can do a proper split test on to have enough of volume in a short amount of time that seasons are not affecting it. And then you can tell, you know if this works or doesn’t work. So you know, there are some other consultants that suggest split testing your images or split testing your prices, you know, one week run this one, we cannot Well, when I was running my split test the way I did this, this two weeks, I’ve check if there are any seasons affecting my product. And I’m running with one price for two weeks, two weeks, because I calculated there’s a tool that tools online, which calculates statistical significance. So what I did is in my Amazon business reports, I took the number of sessions that on average gets to my listing. And that put in that number. So number of sessions seems simply means visitors to your listing number of visitors, and I put in what conversion rate I would like to have. And then that’s total gives me the statistical significance them if you just Google statistical significance calculator, you have a few options there. And so from that, you will know how long you should run it, you will tell the calculator, I am getting 500 views a day to my listing, and they want 15% conversion rate because right now I only have 12%, let’s say, and the top there, you run it for four weeks. So Ben run its trade for four weeks, run it two weeks, this price, then another two weeks, two weeks, another price, skip the weight through the Halloween or something. And then again, run for two weeks, one past two weeks and express so do short periods of splits so that the match each other, you know, don’t do three week stretch, and then four weeks another because you will be affected by all kinds of seasons and things like that. So that’s the way Iran and because it was a low volume product, I ran the whole year of that test, skipping the seasons, and I wasn’t personally doing it. My view was working for me. Because it’s a lot of manual work, right? You have to go and switch and track that you do it on time and things like that. There are tools that help you do that. But again, you need to manually manage, what about using tools like split lead calm versus It sounds like you’re doing it manually or your VA is obviously

Michael Veazey 11:45
some makes a lot of sense. But can that didn’t that number be brought down somewhat by using split the.com, which obviously alternates it more quickly than you would manually be able to do in a practical way.

Paulina Masson 11:54
But again, you have to not forget, you have to think about the seasons a lot, right. So whatever change your make it first of all has to be only one change, don’t change the title and image and something only the pricing change to only that or only the coupon amount change only that and skip the season. So GoPros politically am pause for the amount of while the seasons going and then unpause you know, so you have to still a little bit manual management thinking about all these things, and don’t run PPC as well. So yeah, there’s more more things to that in the formula. But in general, it’s not easy to do split testing. So that’s why I don’t even recommend doing it. That much. You should just you know, sometimes, mostly on Amazon, we are competing for price, right? Even though you are serving the luxury customer. So if you’re serving luxury customer, you are already gonna have your price high. So there’s not much split testing, you can you can do like $10 there, but this is it’s a spontaneous buyer. So just put this highest you think spontaneous buyer would buy it, judging from the markets existing market situation in the world of that type of fraud. And that’s how you can decide your price better than jumping, you know, on the little things with the split testing, which is so I’m untrusted for, you know the the results with that

Michael Veazey 13:12
so manageable by your reading of the marketplace, then more than the split testing is that what you’re saying? rights

Paulina Masson 13:19
based upon market demand supply and overall research off the market and how you want to position yourself rather than deciding on the split testing, split testing can only help if you’re deciding a difference amount, right? If it’s like $10, higher or $10 less when you are have a $15 product, that’s going to make a difference, it will show you. But if you’re just testing the $2 difference in the split test, it’s not going to really show you anything maybe on that week, something happened on Friday and more people bought it and then you’re going to suddenly think that $2 work better, because the price difference is not significant enough for people to switch their decision yet. So you know, the amount has to be more bigger if you want to do a split test. Interesting. Because of that is a lot but it’s hard.

Michael Veazey 14:06
Yeah. And and I think that my experience of split testing is that you can sometimes reveal some very interesting things. But you’re right that we have to look at this statistical significance of that. And I think it’s quite interesting that use the tool for that it’s very simple rule of thumb is I put in a number of sessions, the conversion when you want and then let the tool tell you how much data you need. And also the idea that you’re not running PPC, very interesting. So there’s a kind of sacrifice to testing testing. It’s like the observer effect, isn’t it? If you test things, you change things. So for example, if you change your PPC, if you turn that off, you’re going to change quite a lot about your listing performance. So yeah, interesting. Well, anyway, I’m really some food for thought it sounds like it is worth split testing, but only with, you know, some high volume products that are fairly consistent in summary, if I understand that. Now, the other thing about pricing psychology, I know you’ve got a few tips and tricks, which I want to make sure that we don’t miss that. You were talking about keeping prices simple. And we talked about $21. And we’re $3 off versus $4 off. What about using 99 cents or 97? At the end? Is that actually important at all?

Paulina Masson 15:13
Yes, actually does a lot. Now firstly, let me ask you a question. You know, this 99? Why is the whole world using 99? Why Why? What’s the deal with them internet? Well, the answer is very simple. Look at the two prices 2999 or $30. Round, we read it from left to right, we just read the first one as 20 somethings and the second one is 30. Something you know. So if it’s 20 somethings you super, that’s the one we’re fine. But you know what happens psychologically, because we are so conditioned by the world with a 99 at the moment, and then everywhere, we started believing that the 99 associates with the bargain with the good deal with something cheaper, and that unfortunately, something cheaper often equals to lower quality. So we we are sort of brainwashed to think that that is the bargain item. But unfortunately the side effect of that it possibly is a low quality item. So if you want if you have positioning yourself now for those spontaneous buyers, as a luxury product, like I mentioned before, you should put yourself into the round numbers. So make it the $30. Or let’s say 2799 and 28, make it the $28 because it will be so unusual to the eye. And it’s still quickly readable, but it’s something different. This one must be different, maybe better enough. So it’s like not this low quality one, which is 9999 bargain item. But in general, let’s see the ending itself, like you said, 97, or 99, that does not have so much effect. And I would not recommend using complex numbers like 77 In the end, or 29, or all of these little things off the dock, just focus on 99. And that’s it 00 why because whatever you make, in the end, 28 or 27, or or whatever, people will still read it as 20 something right, they are not going to bother the brain is not going to handle the complexity that you give them at the end. And this even gives extra confusion to the brain to consume that ending, because so unusual, right? gives, even wash, make it for yourself. So in the end of the year, when you look at the profit that you made, if you just add up the sense, you know, if you have a mentor of mine, always you will make more profit than giving those you know, 67 1977 or whatever. So you’re making more profit and less complexity. And that’s totally useful. Yeah, absolutely, I bought the same point, there is another thing that grew out of it psychologically, from 99 and 00. At the end, because we are so conditioned, like I said to 99, in addition to that side effect is that we think that our numbers are more bargain type and inhale numbers are not because when you see 99, so many odd numbers in the Android mine line, and then very often is like 1999. So all of them are all numbers, right. But if you know some put 22 00 It looks so different suddenly. And that gives again, that luxury feeling. So now becomes from the same thing you grew that in the numbers give you more luxury feeling. And the old numbers give you more of the bargain and the cheap item. So if you want to play with the end, like you said, 97 I would rather put point 98 if you want to play in the luxury field, right, so if you having like 2298, you know, I would make at the end if you have to, if you have to just play on onto that on the number but nothing else I would ever use except 99 000. Now, depending on your strategy,

Michael Veazey 18:50
I really like this, I think actually the positioning things, for instance, is that you know, price is a positioning tool. But I it what’s really emerging and what’s becoming it’s so obvious, it’s a sign of every good bit of wisdom is that as soon as somebody says that you think, oh, that’s really obvious, but I hadn’t thought about it before, which is, the more complex, you make things around numbers, the more resistance you got on the sale. But also, I love this feeling of even when you talk about this sort of emotional reaction to numbers now like 22, I’m feeling more relaxed, like 24, I’m feeling a bit calmer, like 1997 I feel anxiety when I think about some like, or really calculate. The other thing that it tells me that it strikes me is that it feels like the person is trying to hide something a bit, they don’t have confidence in their price. And if I want to buy an expensive thing, and somebody says, you know, like the internet marketing courses, always 97 pounds, and I do the same. But I’m like, why don’t you just call it 100 pounds? I know what 100 and I’m okay with, it’s not going to change my price. But I just have this feeling that is it a bit of a used car salesman moment happening. And it’s funny how I mean, there is something about even the way you present your price implies how you feel about your process. And it’s a bit like you’re ashamed of your price if you put 99 on the end. Now for a bargain Hunter, that probably does make a difference. But I agree that for the luxury end, yeah, just thinking about it for the consumer and it just feels 930

Paulina Masson 20:12
Yeah, I didn’t know this many internet marketers are using the sevens a lot. 77 or 97. There’s something with that. So different because I’ve been in different fields before, there are different strategies you can apply. I only talked about the Amazon ones. But you know, the same things don’t really apply in other fields. Like if you have a software product, and you have five different plans next to each other, you cannot put the 29 and the discount of 599. And then the next plan for the night, you know is the homepage going to be so complex because of that you have to simplify $100 and 30 or whatever. And then the internet marketers are using the seventh I am. I’m not so sure why they even do that maybe, you know in casino, the seven this lucky number. Maybe that’s how it became office.

Michael Veazey 21:00
You know what I think? I think that the way it works, these things are all tiny bubbles are things copying each other. I mean, Frank Kern was talking about this. And it probably what happened is that Frank Kern in 1999 cent, did a load of this stuff. And about you know, 400,000 people bought his products or something and everyone says copied everybody else. That’s my theory. I have no particular justification for that, and any scientific basis, except that I’ve seen how everyone copies everyone else, which is a good reason, as you said, just to wrap up on pricing as a positioning tool to be different. If everyone is 1199. And you’re 16 pounds, it stands out right to the eye. And that’s that’s a critical thing,

Paulina Masson 21:43
especially if you have a silver dollar off, and then you suddenly are the same price, but better. Not the cheapest yellow. So yeah,

Michael Veazey 21:53
absolutely. Yeah, thank you. Well, that’s been some excellent, very practical tips and also interesting psychological side things. So pulling that obviously, pricing is a topic you’re very passionate about and some fascinating insights today, I know that you’ve got something you’re preparing the grand exposition on cash flow management, which is really important. So we look forward to having you back about that. But obviously, you’ve got a lot that you’ve already given us. And I know you have your shopkeeper out. We also just gently mentioned that, since you run it and what is it does is basically Profit and Loss management for Amazon products. Is that right?

Paulina Masson 22:28
Yes, it’s an accounting tool for those who don’t like to be too techie and too technical, right? Even though you are advanced seller, it’s very useful to see everything in the bird’s eye view, then quickly simple numbers making that much this one is the loser you quickly you can scan this one needs work, this one needs to be optimized. And then when you need more information shopkeeper you just keep clicking on it. And it gives you more and more accounting details, you know, everything you need from lists of all those with the profit by order, and then all the fees that exists You know, there is 170 something fees on Seller Central that exists different things like goodwill, goodwill, reimbursement, and many, many things. It pulls automatically for you, and then presents you with the numbers. So basically what shopkeeper is, yes, it’s a business dashboard for sellers to have tools to make decisions quicker and easier. But most importantly, every morning, you open it, and you can decide what is the key things you should focus on. On that day, you will see some red, Okay, this one is losing money, you know, okay, I have to switch the pricing on that, or storage fees just got kicked in. Look, this product lost me money not made me money in the last month. So basically lets you quickly spot the ears of what to work on during your day as an Amazon seller. So that’s what it helps with being a dashboard.

Michael Veazey 23:49
Excellent. And that ties very well in with a conversation we were having in a mastermind meeting last month with the seller who’s probably got a run rate of about a million dollars a year. So serious Hello. And he was saying that he wants to manage by exception in a other words, and he’s got he’s got a background in business intelligence. So he’s very comfortable with spreadsheets and software. But he said Nevertheless, he doesn’t want to take the time to dig through the numbers to find the problems he wants to know. Is everything green and normal. Yes. Okay, where are the red lights flashing that I need to deal with. And that sounds perfect. That this this is that that kind of mentality is built into the software. And it’s really good. And as you’d expect from somebody who’s thought so carefully about keeping things simple, it’s great to have a sophistication like your software sounds like that. I’ll be looking forward to checking it out. The starts with simple and you click through for more complexity rather than starting with everything, which just overload your brain, right. And however clever your brain is now for good you are with numbers. After an eight hour day staring at a screen, everyone’s brain gets tired. So I think starting with simplicity is just a great idea. And that makes a lot of sense to me. So if people want to check that out, we’ve got a little link. So it’s amazing fba.com forward slash shopkeepers sh o p k, EP, what sort of is our solution trials, many ways that people can check it out to find out if it’s right for them before they used it, if they find it’s the right. So yes,

Paulina Masson 25:05
I have a very, very nice deal for your listeners. You know, you guys are advanced seller, so you will really appreciate that. Most of us author when they’re on promotions, they give 30 days free instead of 15 free trial or 90 days at most. But we will give you six months free trial that will give you 180 days to properly analyze your data and to see if you even like the product, right so it six months free trial, you will get not through the regular link shot people not calm but only for the link Michael just said which is

Michael Veazey 25:40
amazing. fba.com forward slash shopkeeper.

Paulina Masson 25:44
Right. So that’s the only way you will get the six months. But once you come in through that you will get just enough time to explore it pull your history and see analyze what works, what doesn’t work, what is failing. And it’s always nice to have a tool at your hands, even if you are by any chance beginner seller and you’re just starting to sell on Amazon. When you’re a beginner, you can’t really afford tools like that. So it’s also going to be worth it for you as well.

Michael Veazey 26:11
Yeah, well, it’s a bit of a no brainer. And the thing is you’ve got a six month free trial or something you might as well use it and if nothing else, it will give people insight into your way of looking at the world so software as a kind of hardwired way of of looking at the world and why isn’t it and I think it’s always interesting to see what different people’s way of looking at finances is even if people don’t use it. So yeah, but have a no brainer really might as well use it amazing FB a fit before 38th alpha.com forward slash shopkeeper so just remains for me to say thank you. But my last thing before I do that, I always ask if you got one tip in the area of pricing for a serious seller, 678 figure seller, what would that tip be?

Paulina Masson 26:52
Most important tip is go and make a task to simplify your pricing. Just like I mentioned over and over. And simplification is the key to get more conversions from exact same number of sessions visitors to the page. So the simpler you make it, the better conversions you have. So it’s, it’s the key to making more money. So you don’t have to raise the prices to actually maximize on your profit, you can raise your click through rate and then get higher conversions because on Amazon, higher traffic means higher conversions. So the more people see your listing, the more people will convert in your listing. So just making it easier for them more inviting. You should simplify, simplify, simplify.

Michael Veazey 27:38
As fantastic advice. It couldn’t be that so just reminds me say then thank you so much for coming on the show. And please do come back when you’ve got your mama’s cash flow talk. I’d love to hear that. Thanks so much for coming on.

Paulina Masson 27:51
Well done. Thanks for inviting me. Take care.

Transcribed by https://otter.ai

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