
Eight pricing strategies - davidw
http://www.smallbiztrends.com/2008/08/8-pricing-strategies-you-can-implement-right-now.html/
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tptacek
Better title would be "eight pricing tricks". It would be neat to read a blog
post on fundamental pricing strategies, like price points, value pricing,
cost-based pricing, loss leading, and so on.

It's a fine blog post --- except for the Arby's part --- but if someone has
something more substantive, I'd love to read it.

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helveticaman
Apparently, people perceive different numbers differently with respect to
their value. I'm not sure how to say this, but the point is that something
that costs 99 cents appears cheaper than 1 dollar. The number for which the
difference is greatest and most beneficial for the seller is 77, according to
Chicago Business School.

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gaius
_A latte at Starbucks has a higher perceived value than a basic coffee with
cream._

I'm not sure that that's the reason. When I pay for Starbucks what I'm paying
for is the infrastructure that allows for a consistent coffee/muffin
experience wherever I am in the world. I can walk in and describe my drink
according to the protocol and get it. I'm happy to do that but the coffee
itself is just coffee.

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josefresco
When I pay for McDonalds what I'm paying for is the infrastructure that allows
for a consistent burger/fry experience wherever I am in the world. I can walk
in and describe my food according to the protocol and get it. I'm happy to do
that but the food itself is just food.

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gaius
There is a good deal less scope for customization in the McDonalds experience.
Can you even add or remove components for your Big Mac?

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baltoo
Yes

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kylec
The article makes mention on several occasions to the perceptions of customers
(i.e. quality/value, small/large payments, etc). While it's good to try to
understand the way a customer perceives your price, I caution people against
trying to play too many tricks with their customers heads. From #6:

 _Think QVC (the shopping TV channel) offering items for 4 easy payments of
$29.99 which is more appealing than $119.96._

I would much rather pay for something advertised as $120 than "4 easy payments
of $29.99", because the latter seems like they're trying way to hard to trick
me into paying a price I don't want to pay.

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tstegart
Wait, you just said you'd pay $120, so how are they tricking you into a price
you DON'T want to pay? Do you think its a bad practice because it increases
the conversion rate, or because it might convince people to buy something they
can't afford? After all, its the same price, just presented differently. If
you would buy at $120, paying 4 payments doesn't matter. If you wouldn't buy
at $120, but can afford it, and are convinced by 4 easy payments of $29.99,
its not like you can't do math.

At what point does a psychological trick become dirty? That one seems pretty
basic, any idiot can add up the payments and know what price they're paying.
Should we yell at gas stations because they convince dumb people to buy at a
penny more by pricing it 1/100 of a cent below a higher price?

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kylec
You're right the price is the same - my gripe is how they attempt to obfuscate
the true price by breaking it up into installments. When something is priced
as X payments of Y (as opposed to the actual price, XY), there's an underlying
assumption that I wouldn't purchase it at 1 payment of XY, otherwise why
bother with the "installments" mindgame at all? Maybe I'm a overly sensitive
to these sorts of indirections and concealments, but having to constantly
expend energy to figure out how much something really costs can become
wearing.

And yes, I do find the fact that gas stations price at tenths of a cent to be
very dishonest - especially when they ALWAYS round up to the nearest cent.

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tstegart
Have you read Robert Ciadini's book? You should, it explains all the tricks
marketers use to persuade you to buy something or buy into something. Most
successful companies use some form of persuasion to get you to do something.
<http://en.wikipedia.org/wiki/Robert_Cialdini>

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jlogic77
When trying to figure out pricing another thing I have done in the past is
preserve your premium pricing. It somewhat adds on to #8 and how "Everyone
Loves a Bargain".

You can use this in the beginning phases of selling a product or service. Give
an intro price. Make sure you let the customer know that this is a special so
you can preserve your premium pricing. Give a "Special" 15% discount for the
first purchase... or for the first month. Then as business rolls on, you can
go to your premium pricing.

No one likes a price increase, but it's not seen as an increase if you are
removing a discount.

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richtaur
I find pricing mechanisms fascinating. I'm at An Event Apart right now, which
(with a price tag of $949 for two days) CLEARLY uses the Prestige Pricing
strategy. Interesting stuff!

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BrandonM
Also note that the prestige only comes when people _know_ that you paid that
much. So thanks for letting us know!

