When it comes to evaluating price, most of us don't have a clue what we're doing. According to Priceless author William Poundstone, much of our strategy boils down to "just winging it," and that's not an effective way to do business:
“People tend to be clueless about prices. Contrary to economic theory, we don’t really decide between A and B by consulting our invisible price tags and purchasing the one that yields the higher utility. We make do with guesstimates and a vague recollection of what things are ‘supposed to cost.’”
How can you stay ahead of the curve and price your offerings the smart way? The answer is to rely on rigorously tested behavioral psychology research. Today, I'm going to do some of the heavy lifting for you, and below you'll get a breakdown (in plain English) of some of the worst pricing mistakes you can make, informed by some of my favorite research studies on pricing. Let's begin!