PRICELESS | in less than 300 words
Next up on the “Less Than 300” project is William Poundstone’s PRICELESS.
(Truth be told, ain’t no way PRICELESS can be fully summarized in less than 300 words. No way. But, I’m giving it a shot.)
PRICELESS is an advanced studies book on pricing practices, perfect for MBA students, product marketers, and entrepreneurs. The author, William Poundstone, draws from studies by renowned economists to dive deep into the psychophysics of money to explain how the “mundane act of naming a price ... turns out to be a surprisingly tricky process.”
If you lack the mind of an economist, expect to occasionally get lost in the book. However, just as you find yourself befuddled, you’ll become intrigued as Poundstone shares smart, actionable advice on how to effectively use bundling tactics, anchoring pricing strategies, and menu design to optimize the margin potential of retail products and services.
Bundling tactics, such as combo meals at fast food joints and prix fixe options at spendy restaurants, effectively use the art of confusion to get customers to spend more money. By bundling a la carte menu items together, most customers fail to do the math to see how much more they are actually spending.
Although anchoring pricing strategies have been commonplace for centuries, they are still powerful pricing levers. When a company offers something at an outrageous price as well as offering something comparable at a reasonable price, it’s using an anchor pricing strategy. A retailer doesn’t expect to sell a $50,000 watch. They do expect; however, to sell lots of comparably more favorable $500 watches.
The science behind the design of restaurant’s menu is complex and customers who order solely based on price are unprofitable diners. To get customers focused on choosing dishes with fewer pricing distractions, Poundstone shares simple typography advice including, eliminating dollar signs and decimal points. This helps diners to not see a menu as a price list from which to order cheaper items.
PRICELESS is priceless in how it reveals retail prices “are influenced by factors the conscious mind would reject as irrelevant, irrational or politically incorrect.”
WORD COUNT: 311
[NOTE: I often receive free copies of biz books from publishers and publicists. However, I spent my money for my copy of PRICELESS.]