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?
You (and 68% of people) would probably pick the $59 Economist.com subscription, because it’s cheaper and gives you what you think you need. Right?
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.”
Frickin’ brilliant.
