How the psychology of pricing influences our choices
“Pricing is the moment of truth — all of marketing strategy comes to focus on the pricing decision.” — Harvard professor, E. Raymond Corey
Everyone wants to increase their sales.
But not all sales are created equal — some are more profitable than others. In any given product line, items that seem like they’d provide similar profitability, often don’t.
That’s because the cost to market, manage, and sell a product doesn’t have a direct correlation with the final price. Products that cost less to sell bring in a bigger percentage of their sale price — they’re more profitable for the brand.
So how do you get customers to pick the option that’s best for your bottom line?
There are a few tactics you might use. You could:
- Decrease the number of choices
- Keep your high-margin products top of mind
- Reduce the risk of trying a new, high-margin product
But, there’s a way to price your products that will make choosing the highest margin item a no-brainer. It takes advantage of a proven psychological trigger.
It’s called the Decoy Effect, and it’s a research-backed way to influence customer choice based through pricing.
