One of the most fascinating aspects of marketing to me is the way thathuman psychology changes how we respond to marketing tactics. Pricing is particularly interesting because economists tell us that we’re all supposed to beprofit-maximizing automatons and want the lowest price, highest valueand yet, we don’t always make that selection.
One of the most compelling experiments in this field of behavioral economicsregarding pricing and options is the one below. The first set of participants only saw the Panasonic I and the Emerson microwaves and were asked to choose one. Most of them (57%) chose the lower priced Emerson.
A second set of participants were given the option of those two PLUS an additional, higher priced one, the Panasonic II. And, you would think that people would still want the Emerson right? but no… people switched in great numbers to the Panasonic I... the middle option (60%) leaving only 27% to choose the Emerson and the balance going for the higher priced Panasonic II.
The middle option preference has been replicated in many similar experiments across product and service categories. Are you offering three options? Is the middle option the one that you really want to sell? Do you need more helpunderstanding how to price your offers? I’d love to schedule a free 30 minute consult with you to give you a hand in getting your pricing figured out.