Sticker shock. There’s a reason people came up with this phrase. When they see an initial price for a product or service that’s higher than they expect, they experience brain freeze. They find themselves unable to move forward with the purchase process. If your clients are selling pricey products or services, they can improve their prospects by developing an alternate pricing system.
David Hardisty and Dale Griffin, at the University of British Columbia’s Sauder School of Business, have released the results of new research on the topic of product pricing. Consumers balk at high prices. However, retailers can convince shoppers to buy a core product for a lower price. And then, consumers will frequently agree to pay for an add-on product or two. The end result is often just as expensive as the product at the higher price would have been.
Researchers observed that consumers might not want to pay top dollar for a computer with a lot of memory. But they will buy a computer with less memory and then pay an add-on fee for extra memory chips. The same holds true for dining out. The bon vivant may decide that the $50 prix fixe meal is too expensive. But, then they will order an appetizer, meal and dessert that adds to up an even higher price.
The Psychology Behind The Behavior
Hardisty believes the willingness to pay for add-ons is linked to how consumers justify paying for products. They tell themselves the base price is what they actually paid for that new computer. They may even go home and boast to their spouses about the great deal they got. For these kinds of consumers, the price of the add-ons doesn’t compute.
Not all buyers are willing to overlook the cost of add-ons. But those who do make a great audience for your clients. Share this research with your clients and encourage them to promote lower base pricing for some of their products in order to boost revenue. They can then train their sales staff to sell adds-on products and services. To learn more about audiences who buy on price, check out the profiles for Luxury Product Shoppers and Price Conscious Shoppers on AudienceSCAN. You’ll find them on AdMall from SalesFuel.