Pricing Tactics

There are different kinds of tactics how you can influence your customers in their buying decisions:

The Single Option Aversion Effect

This is a context effect whereby consumers are unwilling to choose an attractive option when no competing options are included in the choice set. 

For example, if you walk into a store to buy a new car and there is only one model left, you are more likely to decide you’d prefer to look at other options too before making a purchase, even if the car is a good product. 

Daniel Mochon demonstrated the Single-option Aversion with an experiment in which he offered a DVD player to participants. His study showed that just 9% of participants said they would buy the Sony model offered when it was the only option whereas the percentage went up to 32% when this same model was offered alongside a Philips model.

Extreme Aversion Bias

This is the idea that people will go to great lengths to avoid choosing an option that lays on the extremes of thinking. In essence people would rather choose the “safe option” and take a middle path than pick something on the edges of possibility.

You can provide your customer with 3 options when making a purchasing decision. A cheap, mid-range and an expensive option. The expectation is that the majority will choose the mid-range option and thus increase your margins compared to a “cheap” choice. 

Hobson +1 Effect

The Hobson’s choice is a choice with one option that you can choose to take, or not. So if you offer a customer a product, he has a Hobson’s choice; “buy the product, or don’t buy it”. Unfortunately for you, most online customers don’t buy. The Hobson+1 effect is one way to counter this habit of ‘unconverting customers’.

So when you offer a Hobson’s choice like ‘buy product X’, your customer will choose to a) buying the product and b) not buying the product. But when you offer a Hobson’s + 1 choice like a) buying the product, b) pick-up in store c) not buying the product, the idea is that your customers’ brain doesn’t come to option c. Therefore chances rise that the customer will go for buying the product.

Decoy Effect

The phenomenon whereby consumers change their preference between two options when presented with a third option, the decoy, which is “asymmetrically dominated”. 

Asymmetric domination means that the decoy is priced in such a way that it makes one of the other options much more attractive.

So you might offer a small coffee for $1.20 and a large one for $2.50. The decoy would be to offer a medium coffee as well at a price of for example $2.20. By doing so the price of a large coffee seems to be reasonable all of a sudden.

Video Pricing Tactics

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