Which tactics will increase willingness to pay?

Updated On: August 15, 2019
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Getting your pricing right can be complicated, and it depends on a lot of factors. This week's question from Leo Campos at Chartbeat gets to the heart of it. He wants to know: Which tactics will increase willingness to pay?

To answer this question, we looked at the data from just over one million different subscription consumers and just under two thousand companies. Here’s what we found.

 

Your price is the exchange rate on the value you’re providing. A phenomenal aspect of the subscription and SaaS economy is that we now have the ability to build features and other value adding functionality into our products extremely quickly.


Yet, understanding what your customers or target customers value and making sure you’re using data to get to persona-pricing fit can take quite some time, as it’s an ongoing process of continual price optimization. We all know that, especially if you’ve read almost anything we’ve published.


To answer this question, we looked at the data from just over one million different subscription consumers and just under two thousand companies. Here’s what we found.


First up, one of the highest impact drivers of willingness to pay is getting your brand and support in order. When measuring a customer’s affinity for a company’s brand and then cross referencing that data with the customer’s willingness to pay we found that those customers who perceived a company’s brand positively had between a 16% and 41% higher willingness to pay than the median. Those on the negative perception side had 15-33% lower willingness to pay. Based on this data, brand not only drives higher willingness to pay, but also can very much detract from your ability to sell to your customers at the level necessary to succeed.

GRAPH 1


Similarly on the support front, those customers who perceived a company’s support positively had between a 12% and 36% higher willingness to pay than the median. Those on the negative perception side had 8 to 16% lower willingness to pay. This indicates that bad support isn’t taking away from willingness to pay as much as good support is driving willingness to pay.

GRAPH 2


If you need a more tactical focus on willingness to pay, you should attack your value proposition. In a previous set of studies we looked at a fake B2B sales product and a fake B2C fitness product, we kept all copy and descriptions the same except we varied the value proposition. For both products we found that the value proposition caused a large variance in willingness to pay.

For the B2B product, certain value proposition were able to decrease willingness to pay by 20% while other were able to increase willingness to pay by 20%.

GRAPH 3

Our B2C example saw the same effect with a negative 10% to a plus 15% swing based on the value proposition. Essentially, how you position your product can greatly influence the value perception from a customer.

GRAPH 4-1


Finally, make sure you revisit the social proof you’ve implemented around your product and purchasing funnel. In both B2B and B2C displaying customer logos and providing testimonials increased willingness to pay considerably.

GRAPH 6-1

On the B2B side case studies increased willingness to pay by 10 to 15%. In B2C these case studies boosted willingness to pay from 5 to 20% with specific case studies having the biggest effect.

GRAPH 5


Remember with all of these tactics your aim is to make sure your prospect or customer understands the value they’re getting when it comes to your product. Since price is the exchange rate on the value you’re providing, these pieces of communication allow your prospect and customer to understand your value at a deep level, which ultimately allows you to get what you’re worth.

If you have a question you would like to see on the ProfitWell Report, send me an email or video to neel@profitwell.com and if you found this episode (or any other episode) to be valuable, please share on Twitter and LinkedIn. That’s how we measure if we should keeping doing this or not. We’ll see you next time.

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