How your clients know nothing about price
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.
So what does it mean?
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 unlikely you would have no idea on 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.
You can watch the video here.
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.
There are no absolutes
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 price psychology fascinates you as much as it does me, then find out about my online video training programme, The Power of Price Psychology.
Wishing you every success on your pricing journey
Chartered Accountant, public speaker and #1 best-selling author of
“Effective Pricing for Accountants”
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