Friday, March 31, 2023

How psychological pricing is used to make us spend more

As we have already seen, the context around us is designed for our spending, and this includes the cost of what we buy. so today we’re going to see some psychological pricing strategies Those are used to leaving us with more money than expected in purchases.

These techniques take advantage of certain personality biases and inclinations that we all have and break our budget. From playing with numbers to taking advantage of our inability to value things properly, Knowing these tips will help us spot them and protect our home economy,

There are an infinite number of them and I can’t fit them all here, so, as always, although we’ll look at some of the most important, I want to focus on them. Understand the common mechanisms they use.

The problem is that value is always relative.

Is it expensive or cheap? Well it depends, because We cannot evaluate the value in ourselves, In most cases, we will issue a decision based on two factors:

  1. vibes product or brand.
  2. the references we have to compareBoth mentally, and around us.

The first isn’t much of a mystery. if marketing has convinced us that something is valuable, even if it is not objectively so (as in the case of a diamond, which is nothing more than a stone whose supply is artificially kept in short supply through monopoly), we will pay more,

But what interests me today, Aspect number 2 is the one that will be used more often to make us spend more Exceed expectation with psychological pricing strategy.

Let’s see how.

damn extra and unpredictable

As we compare with the figures that we have on hand to see whether something is expensive or cheap, If we are buying something expensive then we should be carefullike a house or a car.

Thus, if it costs us twenty thousand euros, an extra 200 euro doesn’t sound expensive at allThis is only 1% of the total. However, a separate acquisition of 200 euros we think well. So, is 200 Euros expensive or cheap? depends on the frame of reference,

because, In the context of high expenditure, we cover the expenditure surreptitiously unforeseen events.

You know, we’re renovating the house and they tell us that, for 300 euros more, they put these tiles on us, which obviously look better, or that a 400 euro modification is necessary because last night The moon was full. In an environment where we compare thousands and thousands of Euros, It doesn’t seem like much to us and we can more easily say yes,

And after paying those 400 Euros without question, we’re going to compare the cost of yogurt to the cents. this is not an anomaly it’s pure human nature,

Almost Any Number Affects Price Perception

we will estimate the cost As per other accessible numbers available with us, Those that we remember that the product was of value a long time ago, those that were announced to us, those that we think should have been or, simply, those that are around us, Although they have nothing to do with the pricereally.

because, Many contexts include an “irresistible” offer surrounded by high prices., If we see a computer for 500 euros surrounded by others that are twice as much, the equipment on offer seems like a bargain, but the computers of around 300 euros seem to us the most expensive.

In a curious 2004 study on sales at an oceanfront market in Palm Beach (Florida – USA), A seller changes the price of some T-shirts from $10 to $80 every half hour, What was the effect on sales?

what CDs in the stall next door were selling more When they were surrounded by $80 T-shirts.

it is The “anchoring” effect of value in relation to other numbers we experience It is well known by economists and the following is one of the types of its use.

Value status manipulates your perception

The order in which they teach us the choices when buying something is not indifferent. If they start showing us the most expensive, that price will support us And it will impress, so that the rest of us will find a better offer than this.

In those situations, we spend more on shopping What if they start teaching us the cheapest option.

It sounds silly, but it’s proven time and time again.

lure prices

magazine economist Did an experiment with two subscription options:

  1. the reach online for all its contents for $59.
  2. Subscription to the physical magazine, plus access to the online newsletter library, for $125.

magazine bet the second option was far more attractive, but Their customers thought the opposite and largely opted online,

However, with one small and (seemingly) silly change, they managed to increase that by 43% for those who chose the $125 option, without changing the price,

I eat? enter a lure price,

Thus, he offered 3 options:

  1. Membership online at $59.
  2. A new Paper magazine subscription for $125.
  3. dual membership, online And on paper for the same 125 dollars.

suddenly, The offer that no one wanted became attractive because there was a comparative attractiveness. Which was also priced at $125, given the low price and made the mixed offer more attractive.

If we look closely, many online initiatives have price tables for their services, where the one with the highest relative value stands (another psychological tactic that attracts us to what they expose) and approx. There is always one that is too expensive for it. ,

In this video, economist Dan Ariely explains the study (subtitles are available).

the value is anchored to the digit on the left and ends in 9

It’s a classic that almost everyone will know, but we do another anchor, Price of a product up to the figure to its left,

For this reason, products priced at 40 Euro or 39.99 Euro are practically equally expensive, but the other one sells better,

It’s not so much for the money you save, but because We give more importance to the first number to the left of the price, Thus, with 39.99 euros we think that it is more in the class of 30 euros than 40, although in fact it is not.

The presence of something free distorts our perception of value

Buy 1 Get 1 Free, A Psychological Pricing Tactic

Imagine that one day I introduce a product in my store at half the price. The next day, I change the offer to another type of offer: “Pay one, get one free.” The most experienced will immediately realize that, mathematically it is the same If on the second day you take two units.

In fact, former is more profitableBecause you can buy one unit and have it at half the price, whereas in the other case you will have to pay the full original price to get two and the total cost will be higher.

And yet, studies show that the other way to do it, Declaring the Unit as Free, Getting More Sales,

When someone wants to further distort our mental calculations when buying, just add something for free: a gift, another product, another unit… In these cases, many people’s rationality jumps out the window.

Since other tactics, such as using discounts, take advantage of our not being very good at arithmetic, any added distortion or difficulty helps sneak up on prices that aren’t quite a bargain.

cheap time reference

Is the price too high? Then divide by daily cost, for each kilometer or belongs to a very cheap product. Thus, something for 30 Euro is “less than 1 Euro a day” or “cheaper than coffee every morning”.

This study by Gauravil shows that this strategy works better than exposing the full cost.

the reason? Again, our frames of reference are the smaller numbers or other cheaper alternatives with which the products they want to sell us are compared. which makes the product seem cheap to us,

How to change price without changing cut price

When companies work with price-sensitive customers or products, another psychological strategy is to increase the price without touching it, which is done. giving less product than before,

what is popularly called to doublehas been studied and works, in particular, when all dimensions are reduced Product’s: height, width and thickness.

Price sensitivity depends on comparability

Comparing prices is the antidote to some psychological pricing tactics

There are many more psychological pricing strategies left in the pipeline (like putting it in smaller print to make it look cheaper, using colors or offering discounts at the end of the month), but the one I’d like to see put into practice is the next one. .

When it’s hard for us to compare prices, the expensive stuff comes easy, However, currently there are many applications that facilitate this task.

because, If we don’t want to fall into the overpriced trap, we must use them Or do our manual field work.

apps Like Soysuper, for example, they help us see which supermarkets are taking advantage of the situation with their prices. Similarly, there are browser extensions for Amazon, such as Keepa, that help you see the evolution of a product’s price and whether the offer is actually selling.

they are not alone I have nothing to do with the people I named, nor do they pay meBut I think they have useful applications in trying to minimize these strategies as far as possible that try to obscure substantial comparisons.

At the end, We Can’t Get Rid of Cognitive Biases Which makes many of these psychological pricing techniques work, but that doesn’t mean we have to fall into every trap that is set out for us.

Nation World News Desk
Nation World News Desk
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