MM-11 8. Behavioral Pricing Tactic.
People make decision based on rational and emotional factor. A beer from resort or shop. As example shows the buyers willingness to pay is not only tied up with the value but psychological factors also play big role. It about the product offer and message that make it easier for customer to compare, decide and purchase.
$4.99 soda is only there to make $5.99 soda look more appealing. The whole point is to make it look like bargain. Customer also have key psychological threshold, $49, $99, $199. And our client had offering $49, 79, 149. And then our client was giving away too much in entry level pride. The good basic offering made standard offering look more expensive. Instead adding a premium offering made the standard and advance offering looks more appealing.
In the end, behavioural pricing tur good vanilla cake into 4-tier torte with gourmet topping. You should only do behavioural pricing on top of rational pricing.
SIX BEHAVIOURAL PRACTICE THAT MAKE THE DIFFERENCE.
1. Compromise effect -. When given a choice people avoid extreme. $10, 25, 40 will mostly choose 25. And by introducing these 2 options you made decision easy for them.
2. Anchor tactics - $59 for online, $129 for online, $129 online + offline. Makes it look like you just throw the online free with offline. By setting 40 percent more it sets the preception of starting point.
3. Using price to signal quality - if it cost more it shapes the perception of higher quality. Higher price send strong signal of quality. $2.5 placebo work better than 10cent. Pricing too low is worse than pricing too high.
4. Razor/razor blade - customer are influenced by the cost that is immediate and in front of them. Even if the total cost over time is much higher. $480 machine and $10 pack coffee vs. $120 machine and $40 pack.
5. pennies a day pricing - making the Barrier down. Adobe 30000 photoshop to 800rs, per month makes it more resonable.
6. Psychological price threshold - $99.99 vs $101, people feel 101 much more expensive.
DONT GUESS, PUT THEM IN PRACTICE.
You run carefully design tests.
- focus group
- controlled A/B.
- run large scale test.