Mark Wickersham (UK):
The Value Pricing System
https://www.wickersham.co.uk/a/6541/wWVxKzFL
Today, I’d like to share a tip
I learned from the science behind the
pricing of menus.
I’m sure you’ve read
my post on the magic of three, on how
important it is to always offer clients
three different packages to choose
from.
However, once you’ve done that,
what’s the next stage? How do you
price those three options?
One great strategy to use when you’re
setting your prices is known as the
‘upgrade nudge strategy’, and it’s
particularly useful for compliance
work.
Imagine, for example, you have
three packages: a bronze, a silver and
a gold – or whatever you decide to call
them.
One of the things we’ve learnt
from the magic of three, from the world
of behavioural economics, is that most
people gravitate towards the middle
option.
And, once you know that, you
can use it to your advantage.
Why slap-bang in the middle isn’t
always good
If, for example, your bronze level is
£199 and your gold level is £349, what
should the price of your silver level
be?
Although your first instinct might
be to price it right in the middle – in
this case £274 – that’s not the right
answer. £274 certainly isn’t the price
you should choose.
Why not?
Well the upgrade nudge
strategy teaches that the middle option
should be priced higher than the
mathematical middle.
In the example I
gave above, a great price might be
£299.
Given that we know most people
gravitate towards the middle price, and
that many will dismiss the cheapest one
without even looking at it in any
depth, your aim is to make the
difference in price between your middle
and top option relatively small.
To be continued…
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