Episode 130 - Price...a non-issue?

This week's article is sure to offend some listeners.  If you're a short man or an overweight woman, the British Medical Journal has bad news for you.  Hey were just the messenger!  Check out their recent study linking hight, body mass, and socio-economic status.  

"Price is what you pay.  Value is what you get."  -Warren Buffett

The Law of Contrast explains how we are affected when we are introduced to two different alternatives or options in succession. We know that contrasting two alternatives can distort or amplify our perceptions of price, time or effort. Generally, if the second item is quite different from the first, we will tend to see them even more differently than they actually are. As a Power Persuader, you can use this contrast to navigate your audience toward the object of your persuasion.

The use of contrast is based on our perception of items or events that happen one right after the other. If you've had a rotten day because you found out you're losing your job and you come home to a new scratch on your car, you will have a different reaction than if you were having a great day because you're getting a promotion and then came home to the scratch on your car. It's the same scratch, but there are very different perceptions and reactions to it.  Contrast is used for negotiations.  When we offer a really low or high bid or when we ask for $200 and only expect $50. This is contrast. What if you thought it was a 60 minute meeting and then it only took 30 minutes.  What if that 15 minute meeting lasted 30 minutes?

This is all about human perception. The human mind has to find a benchmark or comparison to make judgments, especially when we are talking about unfamiliar situations or new products. People need to make comparisons with their past experience and knowledge. The brain will always attempt to contrast your product or service. Is it the best or worst, cheapest or most expensive? Is your product the safe or risky choice or is it familiar or strange? By presenting your prospects with contrast, you are creating those comparisons for them. The mind can't process everything at once and so it develops shortcuts to help make decisions. Instead of making a completely internal judgment, we look for boundaries, patterns, and polar opposites. We want to know the difference between our options, so we naturally contrast the two items. We mentally create a value or price in our mind from highest to lowest. Do you want your prospects to compare your product or service to a second-hand used car or to a Rolls Royce? You get to decide where you want them to start their benchmark.  

Adjusting Value Examples  

Bonuses - 3 bonuses worth $25 each have more value than to get one bonus worth $75

Product – Having all your product arrive in one box has less value than receiving 3 separate shipments.

Retail – Keeping the high prices at a grocery store increases the perception of value and savings when the savings is shown on the receipt

Cars – We feel like we get a better deal on a car when we see the large retail price, and we get a rebate. 

Payments - It is easier to swallow the monthly payments on a large purchase rather than seeing the whole price tag upfront.

Gas – Getting a 10 cent discount when you pay cash is easier to swallow than a 10 cent surcharge for using your credit card.

Payroll – There is higher perceived income when you separate all their benefits on their check versus putting it all in one large sum.

Negotiation – Starting as high or low as possible will get you better terms.