The Psychological Effects of Options Pricing

You might be falling prey to options pricing within the next 24 hours, in fact if you’ve made a purchase recently you may have already been silently attacked by this subtle yet powerful psychological technique.

So what is options pricing?

Options pricing is a way that companies increase the sale of a specific product. It involves providing more options of items at different prices in order to psychologically manoeuvre the buyer to the specific product the company wishes to sell the most of.

Let’s have a look at this in the form of an example.

We will assume that you’re shopping and are in the market for a new laptop. Your average user that doesn’t require anything too fancy and has the basic functionalities of surfing the Internet, checking emails, making Skype calls, word processing, etc.

When you get to the store there are two laptops available. A standard laptop that meets your requirements and is priced at £200 and a higher specification laptop priced at £300.

After spending some time looking at both of the laptops you would most likely go with the £200 laptop that meets all of your requirements as you do not require the advance functionalities of the £300 laptop. Studies also indicate that most people would buy the item that is best suited for their requirements.

All seems pretty good so far, and the options don’t seem to be causing any problems, do they?

The laptop company now decides to introduce a much more expensive and extremely powerful model of laptop priced at £900.

So now when you go to the shop there are three laptop options available to you; the £200 laptop, the £300 laptop or the £900 laptop. Your budget is the same, your requirements are the same, the benefits of the two initial laptops are the same.

You have no need for the £900 laptop, you cannot justify the additional money and you cannot afford this higher end laptop, therefore it is disqualified from your decision-making process.

However, by shifting all of those emotions, thought processes and justifications onto the £900 laptop you begin to feel more comfortable about buying the £300 laptop. Not only does the price difference seen more insignificant, you will also found the happy medium where you’re not getting the cheapest product (with potentially inferior connotations) and you will also not getting the extravagant product (with potentially exuberant and decadent connotations).

How to combat options pricing and save money

It’s pretty sneaky isn’t it?

The fact is that companies will often produce expensive premium items, often known as loss leaders or premium loss leaders, in order to guide you into a position where you will spend more money on an item that you actually do not require tells you just how effective this strategy is.

So how to combat this subtle sales psychology?

Simply being aware of it can help you to give greater importance to the products at the lower end of the options scale.

Be sure to check out the specifications of the lower items and stop looking at other options once your requirements are being met.

If you’re not in control of your money, somebody else will be.