Psychological “B.S.” Pricing Explained with a Blender
You have a choice: you’re looking at a high-end blender putting out 900 Watts of power for $119 or and identical blender putting out slightly more power (1000W) for $179.
Would you be willing to pay an additional 50% for a minimal 11% gain in power?
Probably not – this doesn’t sound like it stacks up value wise.
That’s not the only issue though, $119 is a pretty expensive blender. There are cheaper ones in other brands.
You scroll further and notice there’s a third identical blender available, only it puts out 600W for the same price as the 900W option.
Now after seeing the new option, the 900 sounds like a pretty good deal, it represents a 50% increase in power compared to the 600 for no extra cost.
Given that the only relationship between price and model is power output, it’s a fair call to say more power is better when it comes to home blenders. That raises the question: who buys the clearly inferior 600W model?
Make no mistake, they’re in the business of selling you a 900W blender.
Here are some of the tactics employed:
Price Anchoring
They say the best way to sell a $2000 watch is to put it next to a $15000 watch. Nothing is either expensive or cheap on its own, the price is always judged relatively.
Another good example of a price anchor is Steve Jobs announcing that the price of the iPad is “not $999, but instead only $499”. With no comparison available if he just said $499 would that be expensive or not?
The anchor price here is the 1000W model, which for all purposes is the same in form and function as the 900W model yet 50% more expensive.
Decoy Pricing
If you were going to design a line of blenders varying only by power output you could logically assume that price would be set relative to power, and you would make evenly spaced steps in power. Perhaps: Small, Medium, Large?
The intentional asymmetry in price and power leaves you thinking the middle choice is 1) relatively cheap and 2) it represents good “bang for the buck” on power output:
- Options 600 or 900: Identical price, large power difference
- Options 900 or 1000: Large price difference, small power difference
Without the comparison models, one inferior in each dimension, the 900 model would just be an expensive blender on a website.
Why I’m explaining the psychological concepts of B.S.
While I don’t sell blenders, I do sell software to businesses that employ shift-workers. These people are industrious, straight shooters (“do-ers”) who are able to smell B.S. pricing from a mile away.
The same psychological pricing tactics applied in selling blenders are applied on near every subscription-based software pricing page, only software is usually harder to compare than the power of a blender.
I think complex pricing pages full of decoys give explanations of why silicon valley hasn’t yet figured out this segment of the market, and why we make world-beating workforce software (with one price) out of Australia (almost all silicon valley software is made for white collar workers).
…at very least, next time a friend says they bought a Nutribullet, ask them: “did you get the 900 series?”