Predictably Irrational: A Practical Look at Pricing Psychology (Why We Leave Money on the Table)
Track: Pricing & Profitability
When it comes to pricing and in particular our reaction to price, Homo sapiens is not always Homo economicus, the paragon of cold-blooded rationality assumed by many formal economic models.
As buyers, we are all 'predictably irrational'. Why do many prices end with a '9'? Why do we still have a headache after taking an aspirin costing 1p but the headache clears up after taking an aspirin that cost 50p? (New England Journal of Medicine, July 11, 2002)
Understanding even a little of how clients 'process' pricing can provide valuable insights. We will devote a light touch to a few of the concepts including...
(b) Price relativity & context
(c) 'Deal effect'
(d) 'Goldilocks' pricing
(e) Precise v imprecise (pricing and discounting)
(f) Unbundling & the ‘de minimus’ effect
(g) Decoy pricing