Robert Cialdini quotes two delightful anecdotes on pricing in his book “Influence”:
- A man opened a Native Indian Jewelry store in Arizona, USA. It was targeted to the tourists who thronged the area. There was a range of turquoise which was not moving off the shelves, even though they were of good quality. The shop owner tried every sales trick he knew. He had to leave town on a business trip. In exasperation, he left a note to the head
saleswoman – “everything in this display case, price 1/2”. When he came back, to his relief, the entire stock was sold.
But but but.
There was a catch. The head saleswoman had actually misunderstood the instruction and instead of pricing the jewelry at half the price, she had priced them at double the cost!
- A man referred a close friend to a jewelry store owner who he happened to know very well. The friend wanted a ring for her girlfriend. Keeping in mind that the this gentleman has come with the reference of someone he knows so well, he showed him the ring but quoted only half the price – instead of $500, he asked for only $250. The man’s face fell and he backed away from the deal because he wanted something “really nice” for his intended bride.
The next day, the jeweler realised the mistake he has done. He invited the man again to his store and showed a similar ring and quoted the regular price of $500. But then added that since he has come with a good reference and it’s a wedding gift, he will drop the price to $250.
Guess what happened now?
The man was overjoyed to get the deal.
What’s your learning from this? Do your customers buy your product only for its functional value? Can premium pricing also play a part in why they choose it?