Offer a High-Priced Option

When my clients think about pricing, they often get into thinking about offering a price that a number of people would prefer be the number on the tag.

What happens is they sell to an average in a segment. This segment is defined by a sole persona, and doesn’t become a perfect fit for anyone.

In the book ‘Value-Based Pricing’ by Macdivitt/Wilkinson, an analogy is used of a father buying a pony for his daughter. It shows all the ways how the deal could and couldn’t be a right fit for the father.

They outline that there’s 3 ways we could find out how we can move to become the right fit. They say money-saved, money-made and emotional contribution. The father ends up with the perfect price because the seller discusses the value and offers the right option.

What if we don’t offer the option?

We go back to the average in the segment and don’t give the right fit and never get paid for a high-priced option.

If we don’t offer high-priced options, we’ll never have the best price for our highest paying customer, improving our overall price premium.

This is called Extremeness Aversion in behavioural science.

Even if you don’t sell the highest priced option. You’re making the middle price (your old highest price) more profitable.

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