Time-Based Pricing Strategies: How Time of Day Impacts Purchases

A recent study published in Nature explores an intriguing question: Does time of day affect consumers’ price sensitivity? The findings offer insights that marketers can use to optimize their approach, especially those overseeing time-based pricing strategies and ad budgets.

For marketing directors managing campaigns for medium to large companies, understanding the nuances of consumer behavior can lead to more effective time-based pricing strategies, promotions, and marketing tactics. Let’s unpack the study’s findings and offer actionable strategies to help you capitalize on this new understanding of how time impacts price sensitivity.

What the Time-Based Pricing Study Revealed

The study focused on whether consumers’ sensitivity to price changes fluctuates throughout the day. By analyzing behavioral data and consumer purchasing patterns, researchers aimed to understand how different factors—such as mental energy, emotional states, and cognitive capacity—affect consumer decision-making over the course of a day.

The study found that price sensitivity is not static; it changes as the day progresses.

– Nature.com

Morning Hours: Consumers are generally more price-sensitive during the early hours of the day. This heightened sensitivity is attributed to fresh energy levels and a more analytical mindset, leading consumers to scrutinize prices more closely.

Evening Hours: In contrast, consumers become less price-sensitive as the day goes on, particularly in the evening. Fatigue reduces mental capacity, and emotional relaxation often makes people less likely to compare prices, increasing their likelihood of purchasing without as much concern for cost.

These findings have significant implications for marketers. If your pricing strategies and promotions are uniform throughout the day, you may miss out on opportunities to optimize time-based pricing strategies, sales volume, and revenue.

With these insights, marketing directors can adjust their strategies to align with consumer behavior. Here are five actionable strategies to help you take advantage of time-based price sensitivity.

Optimize Pricing Strategies Based on Time of Day

If consumer price sensitivity and time of day are interconnected, your pricing should follow suit. Dynamic pricing strategies can help you maximize revenue by adjusting prices based on when consumers are most and least sensitive to cost.

Actionable Example: Implement a time-based pricing strategy that slightly increases prices during less price-sensitive periods (evening) and decreases them during more price-sensitive times (morning). For example, you might increase prices by 5-10% during evening hours when consumers are more likely to purchase without focusing on cost.

Example Strategy: An e-commerce platform could introduce “Evening Deals” for luxury products or exclusive items, capitalizing on consumers being less price-sensitive in the evening and more likely to make high-value purchases.

Time-Based Pricing Strategies

Knowing that price sensitivity changes throughout the day, you can strategically promote higher-ticket items or premium services when consumers are less price-sensitive in the evening.

Actionable Example: Launch promotional campaigns for premium products—like electronics, luxury goods, or subscription services—during the evening. Use social media and display ads to target consumers when they’re more willing to splurge.

Example Strategy: If you sell high-end fitness equipment, consider running targeted ads for your most expensive products during the evening hours, highlighting convenience and quality rather than pricing details. The likelihood of a sale may be higher since consumers are less likely to engage in price comparison during that time.

Offer Morning Discounts to Capture Price-Sensitive Shoppers

Conversely, during the morning, when consumers are more price-conscious, offering deals and discounts can help capture shoppers who are more sensitive to cost. Special morning promotions can drive early sales and foster goodwill with price-sensitive customers.

Actionable Example: Create a “Morning Saver” campaign where discounts are available for a limited time to appeal to budget-conscious consumers, encouraging them to act quickly while the offer is available.

Example Strategy: If you’re an online retailer, set up a daily morning email highlighting exclusive “Early Bird” deals on popular items. These limited-time discounts can drive early conversions from customers actively seeking the best value.

Align Digital Ad Bidding Strategies with Consumer Behavior

Digital advertising platforms like Google and Facebook offer bidding strategies that allow you to adjust your ad spend based on the time of day. With the study’s findings in mind, you can increase your bids when price sensitivity is low to boost conversions and scale back when sensitivity is high to improve efficiency.

Actionable Example: Use time-based ad scheduling (dayparting) to target consumers with higher-priced products in the evening and lower-priced products in the morning. You can increase bids during less price-sensitive times, ensuring consumers see your ads when they are more likely to purchase.

Example Strategy: For a retailer running paid search campaigns, adjust your bids for evening hours to focus on more expensive products, while offering lower-priced alternatives in the morning, when consumers are more price-sensitive.

Use Consumer Data to Personalize Offers Based on Shopping Habits

Personalization has long been a staple of successful marketing, but understanding how time-based pricing strategies affect consumer behavior can take personalization to the next level. Use data to tailor your promotions and pricing strategies based on individual shopping habits and time-of-day preferences.

Actionable Example: Implement an AI-driven personalization engine that tracks customer behavior and adjusts the timing and content of promotions accordingly. For instance, offer a discount during a consumer’s typical shopping hours when they’re more likely to be price-sensitive.

Example Strategy: If your CRM system shows that a particular segment of customers tends to shop during the morning, send personalized offers with price-conscious messaging early in the day. Conversely, if specific customers frequently make evening purchases, tailor your messaging to focus on convenience, speed, or premium product benefits rather than price.

Time-Based Pricing Strategies Conclusion

The Nature study sheds light on an essential aspect of consumer behavior: time of day affects price sensitivity. As a marketing director, you can use this knowledge to refine your pricing strategies, optimize your promotional timing, and adjust your advertising efforts to align with when consumers are most and least price-sensitive.

You can boost both sales and customer satisfaction by incorporating dynamic pricing, strategic promotions, and time-based pricing strategies. The key takeaway? Understanding consumer behavior at a granular level—and adapting your strategy accordingly—can give your brand a competitive edge.