Wednesday 29 June 2016, Manchester

David Abbott’s talk gave us plenty of food for thought and some surprisingly counter intuitive ideas on how we should approach pricing.

However, it was unfortunate that although one of the founding members of the original marketing 4Ps, most of those present aren’t involved in pricing! David did give us many practical insights and examples to share with our partners or pricing teams. As the evening progressed it became evident that pricing is something that marketing professionals need to have more input on.

David started by explaining that we tend not to buy on logic but we are far more influenced by our emotions. The old “cost+” pricing and “competition” pricing models still require us to decide what something is worth. And we have developed heuristics or rules of thumb to enable us to make these decisions but as David demonstrated they can be hugely influenced.

He introduced us to four different pricing strategies:

  1. Price Relativity;
  2. Price Anchors;
  3. Price v Value;
  4. Arbitrary Precision.

For each strategy he gave us specific examples often backed with links to the underlying psychological research and references. Some of the examples were really surprising and it is hard to credit how easily we are influenced – it was fascinating. He gave us the following tips on these strategies:

  1. Don’t leave it to the customer to decide what to compare you against – guide the comparison;
  2. Create (arbitrary) anchors but also be willing to break the anchors;
  3. Set price expectations (packaging, branding, and ambiance) - just try a higher price;
  4. Try an arbitrarily precise price (bigger than your normal price).

I really enjoyed the evening and think this is a topic we need to learn more about and if you get the chance to see David do go and listen. Drag some of your fee earners and leaders along it could significantly improve your bottom line. At the very least you’ll have a number of new stories to entertain your family, friends and colleagues!

Tim Collins
The Tim Collins Consultancy
PM Forum North West Committee