Price transparency has been making headlines as more momentum builds for the Hotel Fees Transparency Act. This bill requires short-term lodging brands to include mandatory fees in their advertised prices. While this might make some businesses nervous, we have good news for you.
We’ve tested it time and time again. Transparent pricing will help your bottom line.
We know that because we’ve dedicated our resources to putting price presentation, and user experience optimization under the microscope. From a high level, we’ve found that transparent pricing is extremely important in building user trust and engagement. However, how this works for your brand might not be as clear-cut as you think.
Here are the top findings from our clients to help you get ahead of the price transparency trend.
Don’t Show Fees Late in the Funnel
We’ve tested hiding pricing details in certain stages of the purchase funnel for various e-comm clients, thinking that it was stopping customers from engaging. While we’ve seen as much as a 20% increase in funnel starts from this strategy, we’ve also seen conversions drop 12 – 14% — showing us that customers need more transparency upfront to ultimately make a purchase decision.
Adding Context Builds Trust
We also found that combining a “best price available” message along with transparent pricing decreased “hidden fee” anxiety, and led to increased continuations to the next step by 3% (a 7% increase in conversion overall).
Funnel Starts Don’t Equal Revenue
Even though transparent pricing showed less people entering the funnel, the people that did were much more likely to convert. In one particular test for a client in the travel and hospitality industry, we saw a -9% decrease in customers proceeding through the funnel but an +11% increase in reservations — resulting in nearly half a million in revenue.
Testing into this space allows us to understand exactly how your audience best responds to different transparent pricing strategies — maybe they need to see it right away, or perhaps a context-sensitive approach is needed. These kinds of insights can guide future strategies in optimizing your user experience and conversion rates, too.
Are you ready to get a better grasp on how your audience best responds to transparent pricing? Schedule your discovery call with our experts today.