Predictable Irrationality

I just bought the book on Amazon.com after being recommended to me in a conversation with a friend of mine over in Bend.

It came up during a conversation about pricing and irrational things people do, or that they are predictable, yet irrational. He mentioned the book and a study done by someone at MIT regarding subscription pricing on the magazine, Economist.

Here was how it was laid out: You could buy say, the Web subscription for $59. Or, you could buy the print version for $126.

During their trials of this offer, they noted the majority, from what I recall of the conversation, over 80% replied for the web deal of $59.

Then, the next trial, they mixed it up…the Web subscription for $59, the print version for $126. Or, you could buy the print WITH the Web subscription for $126.

They experienced in that trial, over 80% going for the print version w. web for $126.

It’s packaging and positioning, too. One would also have to check and be sure the only variable was what we’ve talked about and not additional value-building done in the sales pitch to push more towards the $126. Also note, the number of respondants, from again, memory of my call, fairly equal. Revenue increased, cost per sale decreased and profits shot up.

I’m going to be giving this some thought over the weekend as to how to incorporate this into the pricing at dental offices. There’s a lot of psychology behind pricing and packaging. It’s my contention a lot of people are leaving big money on the table.

Some other time I’ll get into the different ways things are sold via price: installments, money down, monthly fees, initiation fees, etc. Very interesting stuff.

Adios and happy turkey, JERRY