I met Dan Ariely at The Market Research Technology Event in Las Vegas. I spoke on the last day at the last possible time slot. Dan spoke on the best day at the best time slot. So basically, he is seriously legit. He’s also a behavioral economics professor at Duke and has a ton of fascinating studies on human behavior and consumer habits.
In part of his presentation, he discussed relative pricing.
Which subscription plan would you choose?
Okay. Now imagine that you had seen this offer instead of the first one:
With this scenario, you (and 84% of people) are probably thinking, “Oh, MAN. I could get Print + Web for $125, when print on its own is $125? What a deal! I’m totally going with the $125 option.”
And just like that, the Economist just doubled their revenue, just by throwing in a martyr price point.
From Dan’s book:
“Most people don’t know what they want unless they see it in context . . . We don’t know what kind of speaker system we like – until we hear a set of speakers that sounds better than the previous one . . . Everything is relative, and that’s the point.”