Ecommerce Pricing AB Test: Adding Savings Percent Can Increase Conversion Rate

Posted By Devesh Khanal | 2 Comments

We recently ran more than one pricing AB test on an ecommerce apparel client to gauge whether or not you should list the savings percentage next to the price of products. Although this might seem to be a “small” test, as per our usability vs. desirability framework, increasing the perceived value of a product is square in the desirability category, which, we argue in that article, typically has a greater chance of affecting conversion rate than usability tweaks (button colors, etc.). In addition, previous tests for this client showed that customers were heavily swayed by price and discounts.

We tested this on the listing page and the product detail page.

The original (“A”) for these tests looked similar to JCPenney.com:

For our client (who is also in apparel), there was also a “was” price and a “now” price — above, JCPenney happens to refer “now” as “after coupon”. Showing the current price (“now”) next to an anchor price (“was”) is a very common presentation of price in apparel ecommerce. Large department stores like Macys.com, Kohls.com, for example, also present their price this way:

But what we tested for this client was adding a simple percentage savings number in addition to the was and now prices. This is how Nordstroms.com presents their price, for example:

Note the “40% off”. That’s what we were interested in. Could that simple “40% off” make a difference?

The hypothesis for why it would help conversion rates is that it could more easily highlight the savings — the thinking being that customers aren’t likely to do math in their head, and when you have an entire listing page of products with two prices each, it’s just too much mental math to internalize. Customer may fail to realize, at a glance, which products are on the steepest discounts.

The opposite argument is that adding more numbers about price could contribute to color and confusion, which perhaps could even hurt conversion rates by making the page look messy (this is a real phenomenon) or by creating more distractions from the CTAs (calls to action).

Pricing AB Test #1: Adding Savings Percentage

We tested presenting this in 2 different colors, so it was an A/B/C test. In both variations the savings percentage was presented as “You Save #%”. In both variations, we added this savings percentage on the product detail page (PDP) and the product listing page (PLP, or “category page”).

The conversion rates to completed order for all three variations were within 0.3% of each other — amazingly close to the same. Here is a snapshot from the Optimizely results dashboard for this client (btw, if you’re curious about our experience with different platforms, here are our thoughts on Optimizely vs. VWO vs. Adobe Target):

You can see the amount of data we collected was significant (yes, this site gets a lot of traffic) — 280,000 visitors per variation for 3 variations, collected over 2 weeks. And yet the conversion rates were nearly identical.

Why did this result in “no difference”? Does this mean that ecommerce shoppers simply ignore percentage savings next to was and now prices?

We actually thought so, until we did a follow up test months later.

Pricing Display AB Test #2: Different Savings Percentages

A key aspect of the previous test, which showed no difference, was that the savings percentage was the same for all products on the site.  This site has about 1000 different SKUs at one time, and all of them (except special items) had a 30% difference between the was and now prices.

The fact that adding this percentage did not change conversion rate tells us that listing the savings in a product’s price as a percentage instead of two dollar amounts, by itself doesn’t seem to do much for conversion rate. (Take the usual disclaimer in statements like these that this applies to this site in this instance, there are always exceptions in CRO).

But what we tested next was placing the savings percentage back on PLPs and PDPs during a period when the store had different pricing for different products.

In this test we did not have multiple colors, simply an A and a B variation, with and without the percent off.

pricing ab test result

This test showed a 2.57% lift in conversion rate from PLPs and PDPs with 99% statistical significance. Revenue per visitor also increased by 2.54% with 95%. This was across 700,000 visitors and 18,000 conversions.

The lift was higher on mobile than desktop. On mobile the lift was 3.61% with 99% significance and desktop only 2.22% lift with, notably, only 89% statistical significance, which by the industry convention of 95% statistical significance to declare a test “significant” would be declared “no difference”.

Nonetheless, even if the lift was for mobile only, it shows a stark difference from the first test which was very much “no difference”.

What does this tell us?

Price Presentation Is a Function of the Price of Other Products

These results tell us that price presentation — a huge needle mover in ecommerce — is not about price from single items. It’s a collective phenomenon. It’s a function of the price of all of your products. Customers view pricing of one product as a part of a collective, where relative differences matter a lot in buying psychology.

The savings percentage was clearly overlooked when it was the same number for all products. But when it changed product to product, it drew the attention of customers and perhaps drew them to certain products with steeper discounts and increased conversion rate. The fact that revenue per visitor also increased means that this was done without simply attracting customers to lower AOV products. The percentage discount mattered, not necessarily the final price.

Overall this suggests the following for ecommerce brands:

  • If you have was and now prices and different savings percentages per product, definitely consider testing showing the percentage off
  • In general test price presentation carefully, it can make notable differences in conversion rate but stopping after one failed test may leave revenue on the table

If you’d like to read more articles related to this or more ecommerce AB test case studies, here are some suggestions:

Finally, if you’d like to learn more about our ecommerce CRO agency, you can do so here.

2 Comments

  1. Grégoire d'Aboville
    September 25, 2019

    As always a very interesting case study. I know I’m being a bit lazy, but screenshots of the actual tests would have made the whole thing easier to digest IMO 🙂

    Reply
    • Devesh Khanal
      October 5, 2019

      Fair request. We’ve been making schematics of the actual tests which we should add to this one as well.

      Reply

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