When you’re starting your business, you don’t know the magic price point. You can take a pretty good guess and possibly get very close, but you won’t be able to pinpoint the pricing level that attracts the most customers and gives you maximum revenue increases unless you try A/B or split testing.
A/B testing pricing on your website is an important step to growing your business and increasing your sales. It will help you discover the price point that is high enough to maximize your profits but low enough to appeal to your audience.
We’ll help you start A/B testing pricing on your website with a few tried-and-true tips below.
How to start A/B testing pricing on your website
1. Be mindful of legal issues
If you’re testing prices, you can’t legally offer the exact same services for a higher price without changing the offering a bit. Selling a month of your service for $60 and then bumping it up to $75 the next month is a bad business decision that can leave you legally vulnerable and frame you in a negative light to your customers.
Make sure you outline the differences between plans with different prices to let your customers know they’re still getting value from you no matter what plan they choose.
2. Find your price range
It’s easier than it sounds to find the general price range you want to test within. Start by looking at your closest competitors and what they’re offering. Take note of the low and high ends of the pricing scale and decide whether you’ll go below or above it. This will help you pinpoint the range you want to test prices from.
For example, your price range might be $40-60 for one level of your product or service, $60-80 for the next, and so on.
3. Start testing
When you implement your first plan for A/B testing pricing on your website, you’ll be closer than ever to finding the “magic number” that customers will pay and that maximizes your profits. Choose price points within the range you’ve selected to start testing officially.
As an example, if your industry price range is $40-60, you might start at $50 to see how your audience reacts. Then you’ll be ready for step 4.
4. Monitor conversions and make adjustments
When you begin testing a new price point, you have to track the conversions in order to select the most effective price for your product or service. If it costs too much for your audience, you’ll know because the number of sales will go down. If it doesn’t cost enough, you’ll know because you’ll have increased sales with reduced profits.
If the number you’ve selected is on the right track, you will see both increased sales and increased profits. Don’t stop if the first price you test brings an increase – you might have just discovered the low end of your magic number. Keep testing prices until you see the number of conversions fall again. That’s how you’ll know you’ve found your maximum profit price.
If you start A/B testing pricing on your website, you’ll quickly realize that it’s pointless to stick with one price the entire time you’re in business. Customer needs and wants change, you can find new services to add or subtract from your packages to increase or reduce value, and you may find that the price you’ve been doing relatively well with could be increased a few dollars without hurting your conversions.
Tell us how you handle A/B testing for prices. We’d love to hear from you!