01 Feb 5 things you might be doing that stop your customer from buying

Originally posted by Courtney Deagon

Towards the end of 2020, I posted in a few places to ask my networks what annoyed them most about a company’s pricing.

Dozens of people (most of whom are located where I am, in Australia) responded, and the results were rather telling.

In order from most frequent to least frequent, the 5 top responses were:

1. Currency (showing prices in USD when you thought they were AUD) – 29.4%
2. Postage (either including it at the end, or charging ‘an unfair amount’ for postage) – 23.5%
3. No pricing shown on their website – 17.6%
4. Transparency/being unclear – 17.6%
5. GST (showing prices as excluding GST) – 11.8%

Let’s break each of these down, and look at what behavioural science tells us about why these things annoy us so much, and stop us from making a purchase.

Currency

The key issues here have to do with expectation, trust, and reference prices. Most Australian consumers would come to an Australian website expecting the currency to be in AUD. They would trust the seller to be clear and upfront about whether this expectation is in fact correct. When a customer then sees a price (say, $50), that $50 becomes their reference price, and they are ‘anchored’ to that level; meaning, any other prices they see after that, are then compared to the initial reference price.

If a customer learns the price is in USD, here’s what happens: the price is therefore $65 AUD, their expectation is not met; they are comparing the $65 to the $50 reference price, and the extra $15 they have to pay hits harder because of the natural loss aversion humans have. Trust is broken, and the sale is lost.

Postage

The issue here has to do with perceived value. Your customer has a perceived value for your product (let’s say it’s H, for high), and a perceived value for postage (let’s call it L, for low). They are high and low, respectively, because your customer WANTS to buy your product for some benefit. Most people don’t go seeking out postage just for the sake of buying it – we have a pretty low perceived value of it as consumers.

When your customer sees a price for the product they have a H perceived value for, their brain finds it easier to accept. However, when it sees a price for postage, because the perceived value is L, it’s harder for the brain to accept it and make a purchase.

This is exacerbated by the fact that if postage is separate, the customer’s brain thinks it is paying TWO prices for ONE product. Each time our brain is exposed to a price, it sets off a distress signal in the brain – because a price is a signal of economic (monetary) loss.

As humans, we’re wired to maintain our economic status, and avoid losing it. Because of this, convincing a brain to buy can be hard enough – when you ask a brain to pay TWICE for something, and one of those prices is for something they have a low perceived value for, this makes it much harder.

No Pricing

You can call this the ‘too hard basket’ effect: if a customer comes to your website and has to then find out how to find your prices, chances are, they will leave the website and choose someone else. This becomes more or less likely depending on how much competition there is. If you’re in a saturated market, you’ll want to make your pricing as easy as possible to find AND understand.

This is because the human brain is designed to process and make decisions as efficiently as possible. Having no pricing creates what behavioural scientists call ‘friction’. Although intangible, it’s incredible effective – it can stop a customer from buying, but it can also be used to stop customers from leaving (by convincing them to stay).

Transparency

The transparency issue has to do with both the friction problem and the trust problem. If you have information but it’s unclear, or there are too many options, or the process is complicated, a customer may become frustrated and give up. As well as refusing to buy, they will have also lost trust in you.

GST

For our non-Australian friends, GST stands for Goods and Services Tax. It’s a tax attached to many products and services in Australia, at a rate of 10% of the purchase price. In Australia, if a business is GST-registered, they are legally obligated to list their prices as either including or excluding GST, and to make this clear.
For example, a $100 product can be shown as:

• $110 (inc. GST)
• $100 (exc. GST)

Both are legally acceptable – however, many customers don’t like prices to be shown as exc. GST. Again, if shown an original price, the customer expects this the price they pay. If GST is not included in the price, and is instead added to the check out at the end, the customer ends up with a nasty shock – their perceived value for GST is L (low), plus the total they now have to pay is more than they expected. The result can be a negative experience, a lost sale, and lost loyalty.

The Good News

It’s not all bad news, though – if you’re a business owner, use these insights to review your pricing. Ask yourself:

• Are your options clear + easy to understand?
• Can you include things like postage and GST into your prices so your customers are only exposed to the one price?
• Can you ensure your prices can be easily found on your website, pages, and other marketing materials?
• Are you displaying the correct currency?

I hope this has been helpful for you – as always, I’d love to hear any questions or thoughts you have. Feel free to leave a comment below, or contact me at courtney@courtneydeagon.com.

Don’t forget, you can find more free resources in my free Facebook group, The Pricing on The Cake – click here to join.