How to Set Your Prices

1. You're selling something for a ridiculous price.
2. The customers LOLOLOLAUGH at you.
3. You cry.

You know that you can't possibly reduce your prices or you won't profit.

What in the mother eff$!^@ do you do?

Introduce something more expensive; people then start saying to themselves:

• "HEY THERE!!!"
• "That original price looks more attractive!!"

For instance, say:

• You're selling something for $10K.
• You remind them that the "premium" with more bells and whistles version costs $25K.

Automatically, the $10K version looks more affordable.

The Contrasting Principle

The contrasting principle explains why:

• You find hot people hot in different contexts; you compare the more attractive person to the rest of the people around him/her.
• You label smart people in different contexts; you compare the smart person to those around him/her.
• You find better deals in your product choices; you compare a price to the rest of the prices you know about Product X.

Your Perception on Car Pricing

You find a $30K BMW cheap, for example, when you compare that model to the rest of the BMW line.

Yet, you also label a 7-series V8 priced at $75K being more affordable if you know about their 7-series V12 model priced at $140K.

• Car manufacturers have ridiculous prices at the top end that 0.00000000000000000000001% of people can afford because they know that people will subconsciously compare those filthy-top-end prices to their regular-top-end models.

The Mercedes Benz SLR for instance goes for $500K; yet, promoting the SLR helps Mercedes market their $110K CL-class line more effectively.

According to Arizona State Researcher Robert Cialdini, the psychological research king of the world:

When consumers must make a decision, between two products, they often compromise by opting for the less-expensive version. However, if a third product were to be offered that was more expensive than the other two choices, the compromise choice would shift from the economy-priced product to the moderately priced product (which is no longer the highest-priced product in the set of choices).

How can you price your products?

1. Price your products as you normally would.
2. At the end, introduce a ridiculous price with the freakish bells and whistles.

Let's say you're targeting a $20/month price for your web app.

• Set a price point for $50/month that gets a person more stuff.

You'll make your target offering look much more attractive.

Contrast the mofro.

If you enjoyed How to Set Your Prices, get a complimentary subscription to our freshest articles through email or through your feed reader.