Pricing consultants > Structured Relative Pricing for better business performance

How do consumers know what price to pay for a product or service?

Studies in pricing psychology have established that consumers don’t really know, so they guess by comparing products and their prices, and by thinking about the relative advantage of one product or service over another.  So it’s quite literally all relative – consumers are much more sensitive to relative differences in price than to the prices themselves.

Big house vs Small house, Big car vs Small car, Big TV vs Small TV – all act as reference points for price differences which help consumers to make sense of the world around us.

Businesses and market sectors which have learnt to understand and apply this approach to planning their pricing strategy know that it works.

In theatreland show producers and venue owners know that cheap seats don’t sell.  So they plan their ticket prices carefully to ‘scale the house’ knowing that the price of the expensive seats will help to sell the middle priced tickets.  Brands like Deutsche Bahn running loyalty programmes which incentivise frequency through discounting know that revenue and margin can both improve.  It’s counter-intuitive but it works.

Some of the principles draw on the same proven psychology which underpins hypnosis and which explains how alternative therapies can work in medicine.  Why more expensive painkillers work better, even when the medicine in the packet is the same as low priced ones.  Other principles explain why luxury goods brands have learnt to set extravagantly high pricepoint anchors.  Why you should never present a single product at a single price.  It’s a netherworld of powerful pricing consultancy built around an understanding of the workings of the human brain. It can help to explain, demystify and debunk the secrets of structured relative pricing.

If you’d like to find out more, click here to browse through a selection of FREE pricing case studies showcasing big differences in pricing effectiveness.

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Or click below to see short filmclips from our Youtube channel which showcase applying principles from psychology to marketing (5 filmclips, 12 minutes):