Choose Your Price
I founded a brand called Lost Cat™, which embodies a never ending search for new ideas, understanding, & meaning. It embraces the unknown & encourages you to as well. This article details an experiment we ran from 07.14.2015–12.18.2015 called Choose Your Price.
One might assume a consumer will always choose the lowest price, but here’s what happened when we let them choose between a set of five different prices for any sticker pack on our website:
As expected, the cheapest option was the most popular. However, much to our surprise, the most expensive option was the second most popular. We did not see a significant impact on Gross Sales, so one could suggest this tactic is not worth the trouble. However I would argue that sales not being negatively affected should be seen as a positive, since this experiment had interesting affects elsewhere. Not surprisingly, we saw a significant uptick in items sold & more importantly in repeat business.
An increase in items sold means you sell more, obviously, albeit potentially at a lower price. If each price option covers your production costs then having a variable price structure could be beneficial. I’m not completely sure why anybody would willingly pay more for a product, but we’ve demonstrated that they will. There is probably some very interesting psychological explanations, but I’ll leave that for you to deduce.
An increase in repeat business is an obvious win because your consumers may be forming a habit, which is important to your business because, as we all know, habits die hard. Nir Eyal has written extensively on the topic. Habit forming products are great if you can consistently monetize them & this idea accommodates for variability in a consumer’s spend-ability.
So has this idea successfully formed a habit in our consumers’ spending? Tune in next year to find out…
This is an excerpt from my Lost Cat™ Annual Report 01. Download the full report for free at http://lostcat.nyc/Report/LostCat_AnnualReport01.pdf
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