A few points on the pricing emotions.

June 17, 2009 ·  

In this post I outline just a few points on the psychology of pricing.  People tend to buy emotionally and justify intellectually.  How many houses have been bought for emotional reasons?  Then afterwards intellectually we say it’s a good investment.

There are three pricing emotions:

1.         Price resistance.

2.         Price anxiety or buyers remorse.

3.         Payment resistance.

In educating our clients during the sale process we need to be able to address these pricing emotions.  The mere obtaining of sticker shock is not necessarily a negative as once a client is educated to the value then they will often be your best customers.  It’s a known fact that the luxury car ads are aimed at existing customers more than potential owners. These companies understand that after making such a large purchase, customers want reassurance that they have made a good decision.  People don’t go out and buy a BMW because they saw the ad on the TV.  But those who have bought the latest and greatest BMW or Mercedes or what other marquee brand and have spent a significant amount of money need to be assured.  These companies understand that they need to address these buying emotions.  It does not mean that they are addressing it by reducing the price, it means addressing it by educating their customers.

Prices need to be set at the beginning or as early as practical so that we get the pain out of the way and then deal with the pleasure.  We get the ability to educate the client on the value at they are receiving but of course, we need to understand the value equation to be able to do this.

Pricing is a marketing issue.  Pricing by itself as has been countlessly realised in the dust heap of business will not lead you to business success but pricing coupled with great service, understanding what the customers expectations are and delivering value can lead to increased net profit, increased revenue to the business and increased loyalty of your customers which in the long run will be the best growth strategy for your business.  Don’t neglect pricing.

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