Upgrade Your Pricing Strategy to Match Consumer Behaviour
In the latest article in the Harvard Business Review, the authors share how behavioralists are gaining insight into how price affects demand and willingness-to-pay.
They identify 3 "pricing hacks" to reduce "sticker shock and increase the perceived value of their offering".
Read the summary below.
1. Instead of offering a standard option for “$200” and a higher-quality alternative for “$250”, focus on the difference and offer the high-quality option for “$50 more.”
2. Many quality and sustainability attributes are difficult for consumers to evaluate. If a new dishwasher saves 20kWh per cycle, how much value does that provide? The solution here is to translate intangible costs into metrics that resonate with consumers: in particular, dollar costs, which offer a way to reframe the total cost of ownership in a way that is more meaningful for consumers.
3. Stacked discounts refer to cumulative discounts that are sequentially presented to consumers, for example, offering a 20% “first-time buyer” discount, on top of a 15% “holiday weekend sale.” Research shows that stacking multiple discounts is more effective than providing one overall discount.
Read the full article on the Harvard Business Review
Source | David J. Hardisty, Thomas Allard, and Dale Griffin - Harvard Business Review