Much of the following from Dan Ariely’s fantastic book, “Predictably Irrational.”
Knowing how people price shop—especially when it comes to relatively expensive items like high performance technology—is a significant sales advantage. Following are a few proven principals of comparison.
Where possible, always offer comparison products and services, but be strategic about what you compare.
People tend to choose the second best option – i.e. if there are three laptops for sale they’ll choose the second most expensive one. So, in many cases, the most expensive item is just a decoy.
While we tend to compare things that are easily comparable, we also avoid comparing things that are not easily comparable. For example, you’re shopping for a house in a new town. The Realtor shows you three homes. One is contemporary and the other two are colonials. The colonials are very similar, but one has a bad roof. People will choose the colonial with the good roof, because they have something to compare it with.
The colonial with the bad roof is, in essence, a decoy to lead the buyer to the colonial with the good roof. You can create a decoy like this with almost everything. The strategy is to offer one item alongside something very similar but inferior in some way.
Iteration: If you have a high priced item that isn’t selling, offer a similar, but less expensive version alongside it. The high-priced version will sell the lower-priced version because now consumers have a comparison.
The bottom line is that what consumers are willing to pay is fluid: people don’t know what they want unless they see it in context.