Category Archives: Pricing Psychology

Offering Instalment Payments Increases Sales & Profits

 

Offering Instalment Payments Increases Sales & Profits

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Offering Instalment Payments Increases Sales & Profits

One Way To Make More Business Profits is to Consider How Offering Instalment Payments Increases Sales & Profits

The video below explains this in more detail but essentially if you let people pay by installments they find the cost more affordable .. even if you charge more for this facility.

The thing is they anchor the cost on the installments cost and not on the total cost. I know it sounds weird but its a fact.

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How Offering Instalment Payments Increases Sales & Profits

If You Have to Choose Between Full Cost and Instalment Plans … the Latter Significantly Increases Sales & Profits

It’s another Price Anchoring Effect .. or at least a spin off.

See the video for more info.

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Pricing Strategy: Price Anchoring

Price Anchoring is a pricing strategy based on the work of Daniel Kahneman and Amos Tversky

Price Anchoring is a pricing strategy based on the work of Daniel Kahneman and Amos Tversky

Price Anchoring is a pricing strategy based on the work of Daniel Kahneman and Amos Tversky 

If you want to sell a watch for £2,000 and the best way to get people to recognise its value is to place it next to a £10,000 watch. This will price anchor it.

The reason why this works is a common cognitive bias called anchoring. Anchoring works because we tend to fixate on the first price we see and reference value on that when evaluating the value of similar products or services. In some senses Anchoring distorts our sense of value. Clearly the above works best if the potential purchased sees the £10,000 watch before they see the lower priced one. Continue reading

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