Predictably Irrational: A Practical Look at Pricing Psychology (Why We Leave Money on the Table)

Track: Pricing & Profitability

Session Number: 2144
Date: Tue, May 15th, 2018
Time: 2:30 PM - 3:30 PM

Description:

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...

(a)  Price-anchoring
(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

Session Type: Lecture

Body of Knowledge (BOK) Domain: Client Services
Content Level: Advanced
Learning Objective 1: Discover the art, science and power of behavioural economics & pricing psychology
Learning Objective 2: Gain insights into why ‘packaging’ is as important for pricing services as it is for goods
Learning Objective 3: Identify some practical real-world applications of the concepts
Session Type: Lecture

Body of Knowledge (BOK) Domain: Client Services
Content Level: Advanced
Learning Objective 1: Discover the art, science and power of behavioural economics & pricing psychology
Learning Objective 2: Gain insights into why ‘packaging’ is as important for pricing services as it is for goods
Learning Objective 3: Identify some practical real-world applications of the concepts