3. The middle ground: give your customers a reference point

The price of a product can be perceived differently depending on what it’s being compared to. If we sell something for 10 PLN, it will be interpreted one way when it’s the only offer, differently if it’s one of many options priced between 10 and 50 PLN ("great deal, only 10!"), and yet another way if other products range from 2 to 10 PLN ("rip-off, no one would pay that much!").

Recently, I was repainting a room and needed a paint roller. Not knowing what price to expect, I went to a nearby general store. They offered three roller sets:

– the cheapest one, priced at 12 PLN;

– a mid-range option for 20 PLN;

– the most expensive one, with an ergonomic handle, for 60 PLN.

Subconsciously, I dismissed the cheapest one without even checking its quality. The premium version was more than I needed for painting a single room. That left the 20 PLN roller. With two comparison points, my choice felt completely justified, and I didn’t feel the need to look elsewhere. Most likely, other customers unfamiliar with paint roller prices would react the same way. It’s also likely that my decision wouldn’t have changed even if the mid-range roller had been priced at 30 PLN. It still would have seemed significantly cheaper than the high-end tool and, therefore, a reasonable choice.

What does this tell us? If a customer doesn’t have specific preferences and doesn’t know the price range, they will be guided by the options in front of them and will likely choose the middle one^[1]. As a seller, you can adjust the price range to encourage purchases of selected products and maximize your profits.

If the product you want to promote is currently the most expensive in your offering, it’s worth considering adding another, very expensive item. This will shift the "magic middle," making the promoted product appear like a more reasonable choice.

 ^[1] Simon, 2015, “Pricing Man”