- You're selling something for a ridiculous price.
- The customers LOLOLOLAUGH at you.
- You cry.
You know that you can't possibly reduce your prices or you won't profit.
What in the mother eff$!#@ do you do?
Introduce something more expensive; people then start saying to themselves:
- "HEY THERE!!!"
- "That original price looks more attractive!!"
For instance, say:
- You're selling something for $10K.
- You remind them that the "premium" with more bells and whistles version costs $25K.
Automatically, the $10K version looks more affordable.
The Contrasting Principle
The contrasting principle explains why:
- You find hot people hot in different contexts; you compare the more attractive person to the rest of the people around him/her.
- You label smart people in different contexts; you compare the smart person to those around him/her.
- You find better deals in your product choices; you compare a price to the rest of the prices you know about Product X.
Your Perception on Car Pricing
You find a $30K BMW cheap, for example, when you compare that model to the rest of the BMW line.
Yet, you also label a 7-series V8 priced at $75K being more affordable if you know about their 7-series V12 model priced at $140K.
- Car manufacturers have ridiculous prices at the top end that 0.00000000000000000000001% of people can afford because they know that people will subconsciously compare those filthy-top-end prices to their regular-top-end models.
The Mercedes Benz SLR for instance goes for $500K; yet, promoting the SLR helps Mercedes market their $110K CL-class line more effectively.
According to Arizona State Researcher Robert Cialdini, the psychological research king of the world:
When consumers must make a decision, between two products, they often compromise by opting for the less-expensive version. However, if a third product were to be offered that was more expensive than the other two choices, the compromise choice would shift from the economy-priced product to the moderately priced product (which is no longer the highest-priced product in the set of choices).
How can you price your products?
- Price your products as you normally would.
- At the end, introduce a ridiculous price with the freakish bells and whistles.
Let's say you're targeting a $20/month price for your web app.
- Set a price point for $50/month that gets a person more stuff.
You'll make your target offering look much more attractive.
Contrast the mofro.
Posted on November 11
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