Did you know your clients are absolutely clueless about price?
Yes – clueless.
And it’s proven. In fact, it’s proven by psychophysics, a branch of science that has been around for more than a hundred years.
Essentially psychophysics means that we are more sensitive to differences than we are to absolutes.
Take sensory judgments such as weight, smell, taste and sight for example. If I showed you two shades of red you would be able to see the difference – i.e. tell me which shade was darker – but it’s likely you would have no idea about the absolute shade of red.
The same with your sense of touch. If I asked you to put your hands in two buckets of water – one hot, one cold – you would struggle to tell me the exact temperature of the water. But you would be able to tell me which one was hotter and which was cooler.
We are great at understanding the differences between things when it comes to our senses, but absolutes? No idea.
It’s the same with our judgement of price.
Except that with many of those sensory judgements there is an objective measurement system – a scientific scale – in place. With price it’s subjective.
There is no science.
You can watch the video here.
There’s no reason an iPod is the price it is.
And when you recognise that then you realise that your clients don’t know the price of anything too. So, when they don’t know what a tax return price should be, for example, then they judge instead on comparisons. They look to other things to tell them if it’s the right price for them.
And that opens up huge doors for you – as a pricer, an entrepreneur, a business owner. You can suddenly embrace so many techniques in the world of price psychology and behavioural economics that will help you create the right comparisons.
And that will help your clients see your price as being a fair price.
If you found this valuable and would like to learn more about value pricing, I run a free live online training session every month with a topic chosen by you. Attend live and you can ask me any questions you have. Click here to register and I will send you an invitation to the next session.
Wishing you every success on your pricing journey
Chartered Accountant, Public Speaker and Author of Amazon No.1 Best Seller “Effective Pricing for Accountants”
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