Handbook on the Psychology of Pricing
A guide to the psychology behind pricing
Defining the price of an object has a multitude of effects. Often, it ends up having a big influence on the customers’ decision to buy. This book analyses some of the most effective tricks of the trade that can be applied and explains the psychological bonds that are automatically created between the buyer and the product simply by means of the price: information that can be precious to entrepreneurs, marketers and sales managers.
Many useful tips to:
- Understand which psychological levers are used to establish the price of a product.
- Understand the price dynamics that “tie” the product to the consumer.
- Learn how an “attractive price” is created.
The price is a fundamental part of the profit, but it is very delicate because it is the company’s interface with the client
In the business world, the objective is to make a profit. Each entrepreneur pursues their own income, juggling a series of variables: the fixed costs of production, the additional costs, the units sold and the set price.
In a 1992 study, Michael V. Marn and Robert L. Rosiello calculated that a 1% improvement in spending, or an increase in sales - again by 1% - would guarantee a higher profit, but a price increase of the same small percentage would offer an even greater reward.
So we can surmise that price is a fundamental factor, but it must be treated with great care, because it represents a direct interface with customers: how might they react if it changes?
According to the neoclassical theory, the more the price increases, the less a person will be interested in buying an item. In reality, the behaviour of individuals can be influenced by many other stimuli.
The key ideas of "Handbook on the Psychology of Pricing"
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