Robert Cialdini, the author of Influence: Science and Practice, and the inspiration for this blog, wrote in his book about a woman who opened a jewelry store in Arizona.
It was the height of the tourist season, her store was unusually full of customers, and she’d got an allotment of good quality turquoise jewelry. No matter what they did, the turquoise pieces weren’t selling.
The night before leaving on a business trip, she scribbled an exasperated note to her head saleswoman,
Everything in this display case, price x 1/2
… just to get rid of them! When she returned a few days later, she wasn’t surprised to find that every article had been sold.
She was shocked, however, to discover that, because the employee had read the “1/2″ in her scrawled message as a “2″, the entire allotment had sold at twice the original price!
Cialdini explains why these kinds of things can happen:
You and I exist in an extraordinarily complicated environment, easily the most rapidly moving and complex that has ever existed on this planet. To deal with it, we need shortcuts. We can’t be expected to recognize and analyze all the aspects in each person, event and situation we encounter in even one day. We haven’t the time, energy or capacity for it. Instead, we must very often use our stereotypes, our rules of thumb, to classify things according to a few key features and then to respond without thinking when one or another these trigger features is present.
The tourists who purchased the turquoise items at twice their original price were relying on the “you get what you pay for” rule, which is often demonstrated to be true.
This is why in Small Changes: Big Profits (2008 Edition) I explain why it’s so important to test, rather than to assume, because pricing is subject to the crazy laws of influence we’ve been discussing on this blog and that you’ve been regularly reading about.
So next time you’re tempted to slash your prices, why not give some consideration to doubling them instead? (Or at least, putting the prices up.) You might be surprised…
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