How should you price your product???
Clearly product pricing is both an art and science that has clear affect on a products success in the market. There is a large variety of product pricing strategies based on different products, services, and situations. When I was looking around online to find some “pricing tricks” in addition to the strategies mentioned in chapter 11, I ran into the mini article that I have posted above. The article called the “Science of Pricing” explains 7 tricks in pricing. I found each of these tricks to be interesting and beneficial to know when pricing a product. The tricks range from size of price tag to decoy pricing.
I found decoy pricing to be one of the most interesting of the in which an experiment was done that shows the effects of having a decoy product making the similar yet clearly better option seem more attractive. In the experiment, a newspaper offered the web based subscription for 59$, print subscription for 125$, and print and web subscription for 125$. In this situation, the middle option was a decoy making the web and print subscription appear to have superior value. With the decoy price option, 84% of student said they would sign up for the web and print subscription. Without the decoy price, the web and print option dropped to only 32%. This clearly shows the benefits the newspaper achieves by having a decoy price.
In the video embeded, (starting at 12:35) Dan Ariely explains the experiment. The video also has information regarding decoy pricing starting at 11:08.
In conclusion, price your product carefully and keep different pricing techniques in mind to maximize your sales and profits.
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