Psychology of Pricing - Contextual Prices AND Price Anchoring
Similar to using useless prices, you can guide customers’ choices by giving them a context in which to consider the amounts.
If the medium-sized popcorn bucket is the one you want people to choose, space the prices out equally among the three choices. By nature, most customers will select the middle option.
However, if you want people to buy the highest-priced subscription, leave a large gap between the lowest-cost option and the middle-priced option. Then price the other two very close together.
For instance, a small popcorn would be $3.50. A medium-sized bucket of popcorn would be $7.50 and a large would cost $8.00. The mindset here is that “for only 50 cents more” you can get a much larger portion of popcorn. The same is true for fountain drinks at gas stations. Small = $.99. Medium = $1.49. Large = $1.59. Which sells more? Almost always the large for “just 10 cents more.”
Price Anchoring
Want to sell a $1,000 home entertainment center? Show it to customers AFTER you’ve introduced them to a $5,000 home entertainment center. Anchoring works because most of us have a tendency to compare everything else to the first prices we encounter.
The high $5,000 system makes everything else look like a real bargain. The point here is not to sell the $5,000 system, but to use it as an anchor that allows you to move more $1,000 systems.
Like most other marketing elements, choosing the right price point takes testing. Make some notes about how you could possibly use these strategies with your products/services. Then work your way through the options to see which brings the best results.
I’d love to hear what pricing tactics you use and the results you get.
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