306 people visited one of three coffee shops and were asked to buy a coffee at either: €0.99, €1, €1.01 or an orange juice that was €0.15 cheaper than the respective coffee price.
Results showed that, contrary to conventional research on pricing (shown by the dashed line), the round-priced coffee saw the highest % of sales.
105 people were split into two groups, put in a room with either a zesty scent in the air, or no scent. They were then shown a mug, and were asked to bid for it with real money.
Those in the scented room exhibited a higher average willingness to pay for the mug.
Keep environmental scents simple...
...unless it's the brand differentiator (e.g. Aesop, Neal's Yard). Much like visual stimuli, in-store scents deemed simpler result in both higher average spending and cognitive processing (Hermann et al., 2013).
Be authentic.
You'll risk triggering skepticism if you substitute a real side-effect of production for something fake (Lunardo, 2012), i.e. a freshly-baked scent in a store with no oven. Better to have a complementary or no scent than have consumers think you’re patching over an inferior product.
Consider a product scent.
What sort of feeling do you want to evoke upon unboxing? Adams & Douce (2017) provide a brilliant analysis of possible scents. Make it subtle, appropriate and apply it consistently to the entire range. e.g. Tech company Apple is notorious for the sweet scent experienced when opening up a new computer for the first time. Even though you can't see it, you remember it deeply.
378 people were were split into two groups and offered two coffees, small and large, with prices either $0.95 and $1.20 or $1 and $1.25.
Results showed that people were 55.5% likely to upgrade to a large coffee when the small was $1 than when it was $0.95 (28.9%). Average coffee sale prices were also higher in the boundary condition ($1.14 vs $1.02).
Offer upgrades? Use boundary pricing.
If you offer more than one product option at different prices, boundary pricing can help improve the rate of upgrades.
This is because, next to a price set just below a boundary (e.g. $95), increasing a base price to just above ($105) makes the upgrade option ($135) appear cheaper and less of a painful step up.
It's because of the way we encode numbers, chunking them into broader numerical categories to infer value. This increases willingness to upgrade and therefore spending.
Works with multiple upgrade options
As long as the prices all sit within the same price boundary, the effects persist for product ranges with more than two options. This was shown with further studies on purchases of apartments and cars, which both offered multiple upgrade options.
Maximise upgrade range by setting your base price around a more round numerical amount (e.g $10,000 vs $11,000).
This will allow you to offer upgrade options that sit within a broader, albeit the same price boundary ($10000-19000 vs $11000-11999).
Present options together, not sequentially
The effects of boundary pricing disappear when the options are shown separately (different screens / post-purchase), relying upon the user's memory in some way.
Ensure that users can easily see the value of upgrading, by showing the base price next to the upgrade.
Note that impact also reduces when the upgrade option sits in a higher boundary ($205) than the base ($105).
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