This is week three of my psychology of pricing series. Where I share research-proven strategies to influence people to part with their hard-earned money. Some of these pricing tactics work great with your design business, and many of them are perfect for helping your clients get more sales. If you haven’t listened to part 1 and part 2, I suggest you do so before continuing with this one. Let’s continue with the series. The Psychology Of Pricing - Part 3 As I mentioned in the previous parts of this series, these tactics were taken from a very in-depth article by Nick Kolenda on the psychology of pricing. Have a look if you want to read through it yourself. Since you’re here right now, I’ll presume you want me to continue summarizing each pricing tactic. So let’s get on with the list. Tactic 19: Raise the Price of Your Previous Product. This tactic applies whenever you or your client introduces a new, more expensive version of a product. Although under certain circumstances, it may also work with the services you offer. If you’re introducing a new, more expensive version of a product, what do you do with the old version that’s left? Many people would lower the old one to sell the remaining stock as soon as possible. But a 2010 study suggests raising the price of the old product might be a better idea. If you lower the old product's price, you’ll be reinforcing the lower reference price, which makes the new product seem more expensive, making people question if it’s really worth it. Let’s say the old product originally sold for $100, and the new product is priced at $130. If you drop the price of the old product to a clearance price of $80, people are going to wonder if it’s really worth spending $50 more for the new product. However, if you raise the old product's price, you also raise people’s reference or anchor price, which enhances their perceived value of the new product. So instead of dropping the original product's price from $100 to $80, you raise it to $110. Now, people who compare the old and new versions will favour the higher-priced new version that is only $20 more than the old one. And those looking for a deal will be happy to save $20 by purchasing the old version. Tactic 20: Sort Prices From High to Low. A study conducted in 2012 showed that, on average, customers chose a more expensive option when products were listed in descending price order from highest to lowest. This study was conducted in a bar over the course of 8 weeks. The researchers regularly alternated the sequence of the beer prices. Sometimes the beers were listed from the lowest priced beer at $4 down to the highest-priced beer at $10. Other times they reversed the list putting the $10 beer at the top. The researchers discovered that, on average, the bar generated more money in beer sales when the higher prices were listed first. Why does this work? Once again, it comes down to the ever-important anchor price. Whenever someone looks at a list of prices, the first few prices create their anchor price. If the initial prices are low, it creates a low anchor price which creates an aversion to spending money on the higher-priced items lower on the list. If someone wanted to splurge a bit, they might opt for a $5 or $6 beer instead of the base $4 beer, but they probably won't be interested in the highest-priced beers at the bottom of the list. However, if you reverse the order by placing the highest prices at the top to act as the anchor price, each lower price on the list seems like a better deal. Instead of spending $10 on a beer, someone might decide to save a bit of money and opt for a $7 or $6 beer instead. They feel good about saving money but still spent more than in the previous example. As a species, we have an aversion to losses. When we see a list of ascending prices, meaning from low to high. We subconsciously see each price as we descend the list as a loss. Our motivation to minimize that loss causes us to chose a lower-priced product from