On the psychological effect of price

Why does free chocolate make us so crazy? Why is the higher price in the Broadway theater the most popular? Why is it that 1 million dollars of pleasure, 4 million dollars, can make it double? Why bargain, must rob quote and must "lion"?

Economics textbooks point out that the provider of the commodity determines the price of the sale based on the cost of the commodity, the expected profit, and the purchaser determines the purchase behavior based on the utility of the commodity. When both are agreed, can trade.

But as we all know, modern society, many of the physical products and services products, consumer behavior seriously violate the so-called price laws, prices and the cost of goods are quite different, consumers are still very accept. This kind of phenomenon is especially prominent and obvious in the sale of luxury goods. In addition, the price of the 9 mantissa phenomenon, integer phenomenon has become popular, but also become the customary method of commodity pricing.

The relationship between psychology and price

These phenomena reveal that the price of a commodity is not necessarily priced as a textbook, and that other factors are even more important than cost and utility. Among them, psychological factors become the key.

When the commodity is no longer a simple commodity consumed in daily life, its additional function, function and value increase continuously, such as psychological hint, wealth hint, status symbol, etc. The consumption mentality of avoiding the advantages and disadvantages also makes consumers tend to buy the goods with festive colors. Luxury consumer goods through high prices to reflect the wealth of consumers, culture, status, dignity and so on. Therefore, psychological factors become one of the important factors of commodity pricing, psychological pricing method has become an important method of pricing. "Priceless" is a good book on the relationship between psychology and price to make a comprehensive and practical interpretation.

Generally speaking, this is a book between academic and practical, both academic psychology experiment, theory and inference, but also the popular psychological analysis. This book mainly involves the price psychology of the buyers and sellers as the main content, the emphasis is on analyzing the irrational state of the buyer's price psychology, analyzing the singular phenomenon in various commodity pricing, revealing the normal "abnormal phenomenon" in commodity pricing. As a result, this book is a collection of price studies, economics, sociology, psychology, behavioral learning as one of the practical books. As the referrer of this book says, "If you are sales&marketing, priceless" is a practical guide that you can afford and put down. If you are a smart consumer, read through the book, you can avoid one price trap after another. ”

However, although some of the ideas and conclusions of this book have strong practicality, verification and practicality, but their academic logic and theoretical argumentation are not enough, so it needs to be scientifically validated in the experiment and rigorous argumentation in theory.

The Law of pricing

In the book, the author sums up some "laws" or strategies of commodity pricing, but not all of them consider or involve psychological factors, that is to say, psychology is not the only factor influencing and determining price.

In the first part of "The psychological mystery behind the price", put forward the price is not brain, price effect, preference reversal, anchoring effect, our price is very dull phenomenon. The emphasis points out that psychological factors affect the pricing of merchants, and merchants use the psychology of customers to make different prices. However, it is worth pointing out that the psychological effect of price is also restricted by many conditions. In fact, the market economy will lose the basic rules and regulations if the psychological pricing method of commodities can be unimpeded.

In reality, the psychological pricing of commodities depends on a number of points: first, consumers need to have a higher ability to pay, that is, do not have to be preoccupied with the price level. The price elasticity of commodity reveals that most consumers are sensitive to the changes of commodity prices which belong to the daily consumption and consume a lot, but not to the luxury goods. Second, because of the time, experience and other reasons, the lack of enough market price information, asymmetric information, lack of price comparison and buy goods. These are actually not related to purchasing psychology. In other words, if the market information is fully disclosed, the consumer can easily get the message including the price information, then the merchant's price trick is hard to work. With the current popularity of online shopping, goods and their prices are fully disclosed and compared, the purchase behavior is increasingly rational, in fact, has reflected the market information on the commodity and its price impact.

There is another case that deserves attention and attention. Many housewives are familiar with the various products and prices in major markets, are sensitive to price changes and are not confused by price gimmicks, so the so-called psychological pricing method does not work for them. This actually reflects the price of goods and the market is not determined by the price of the game, but also to disprove the psychological pricing method of the shortcomings.

Price "Scam"

In the second part of the "Magic Price scam", the author analyzes the price "scam" that the merchant is accustomed to. For example, the magic number 9, "Free and low-cost", prices must be set higher than the market price, the secret of discount coupons. In all price strategies or scams, there are psychological hint pricing, "childcare", and "package" method, Gift method. In fact, is to seize the consumer greed, pursuit of Geely, the pursuit of status and fame and other consumption concepts, using different price strategies, pull the consumer even into the cycle of the consumption chain.

In the third part, "waving the price of magic wand", it comprehensively analyzes the market and competitors, consumers, pricing strategies, and puts forward the pricing strategies such as preemptive price, inattention of opponents, peddling of currency illusion, gender difference pricing, "Fool's Egg Theory" and "righteous indignation theory". It is clear that the price has the effect of "magic wand", the use of good business can achieve extraordinary results.

The price strategy is analyzed by the price of Super Bowl ticket, Seaside villa, house price and beer difference price. The basic conclusion is that the price of a commodity does not necessarily depend on its utility, or even far from its usefulness, but on the psychology of consumption and the pricing strategy. The "right" commodity price is completely irrelevant to its utility, but it can be done in the market.

Things that don't sell affect what's being sold

However, consumer diversity, product diversity, market information asymmetry and psychological factors always exist, the price of tricks or skills will not end. In this respect, the author explains it with different examples.

For example, "one of the important insights as a pricing theory is that things that don't sell can affect what is being sold." The case is, "Williams, famous for its good quality and high price, has a magical toaster, which costs 279 dollars." Later they added a slightly larger model, priced at $429, and the model was a mess. You're not a boarding school, you want a bigger toaster? Does this point to two: the first is the 429-dollar toaster, which is part of a "childcare" role, pushing the sales of another baker: the second is that consumers still have rational qualities, and the practicality and price of products still affect their buying behavior.

The author, for example, describes the wonders of the pricing strategy with the Super Bowl ticket prices in Major League Baseball. The big leagues sell 500 Super Bowl tickets each year, the first Super Bowl ticket is only 10 dollars, the 42nd session of the Super Bowl tickets to the face value of 700 U.S. dollars, but in the sale of second-hand tickets on the website, tickets worth 2000-6000 dollars. In this respect, there are free tickets, television coverage fees, advertising revenue, fans of tickets and their price of irrational reflection and so on. Similarly, many unique products, such as artwork, important sporting events, and singers ' concerts, all embody this complex price phenomenon.

Of course, overall, if you are the provider of goods, that is, pricing, reading this book can grasp the pricing skills, a lot of money. If you are a consumer, that is, the price of the recipient, reading this book can know the price of the trick, spend less money. In either case, a little money to look at this priceless book should be worth it.