What ACTUALLY Makes People Buy Things (Pricing Psychology Explained)

In this video, we are going to talk

about the psychology of why people buy.

Every single day, whether you shop

online or shop in real life, you are

inundated with tricks from $9.99 is a

dollar value to sample packs to

marketing tailored specifically to you

without you even knowing it. And all

these are tools in any brand or

marketer's toolkit that they can use to

better perform in their business. It's

also things that every consumer should

be aware of so you understand how you're

being sold to and more about why you

make the decisions you make when

consuming. In this video, we're going to

walk through pricing strategies that

will help your products sell more and

give examples of how pricing and product

tie together to form brand strategy in

all kinds of different niches. And then

we're going to dive into personas, how

to break your customers into specific

segments and give value propositions

right to them and look at the technology

stack to do that effectively. This is a

super tactical video you can actually

apply in your marketing career as a

brand or really in any business. But as

always, my video is really rooted in the

sociology and psychology of why we buy,

why we think, why we consume, and why we

love the brands we do. I hope you'll

have fun no matter what your background

is. There is a super comprehensive free

download that comes with this you can

grab below. It includes how to build

personas, all the pricing tactics, even

info on things like how to connect in

your social strategy. And in the first

week of May, our next community call.

Any questions you have, you can come

dive in. There's a link to that below as

well. Let's lock in. So, first I'm going

to speed round through five pricing

psychology techniques. And then we're

going to get into some examples of how

brands structure their product mix to

take advantage of these. So, the first

concept is anchoring. The first number

that someone sees on a page reframes

every number they see after it. This is

why you will always see when someone

sells you something in software or

similar that they will have tiers of a

high anchor on the right, a mid-tier in

the middle, and a low option that often

mostly exists to make the center feel

justified or to get someone to buy in to

later upsell them into the other tiers.

This is all about making the product

feel reasonable by strategically pricing

all three. And then retail does the same

thing. Luxury stores don't stock a $900

candle cuz they think you're going to

buy it. They do it to make the $200

candle seem affordable. And the anchor

doesn't have to be your product. It just

needs to be in the frame. In a bit of a

gray tactic, Kint does this by actually

listing the typical retail price that

they position against with their lower

price. And you'll see retail structures

a lot like this. Best Buy will go in.

You'll see almost every category they

have. Headphones, washers, TVs, have a

good, better, and a best. Someone who

just wants the price option can get the

good. the best sells a lot rarer but

helps anchor the price of the middle and

the middle tends to be a big selling

category. Now let's talk about price as

a quality signal because this is a big

one and one I've had a hard time

learning in my career but people don't

have perfect information about product

quality. If you saw my videos in prior

weeks where I talk about Kashmir, you'll

know that 100% Kashmir can mean

completely different things but still

have the same label. And so on

e-commerce it's almost impossible to

tell. This is why brands will use price

as a proxy. You may think that your

brand you want to offer people a deal.

You're going to give them an excellent

product at an excellent price. But the

problem is the perception based on price

may be that your product isn't actually

excellent. So a lot less people will

even make the choice of buying it to

understand. I look at this in streetear.

People always ask, "How do these brands

sell $400, $500 shirts?" In fact, as

someone who sells $80 shirts, I'll get a

lot of people that will say that seems

too expensive, $80, $100 shipped, but

they're better quality shirts than the

$500. But the boutique owners and the

buyers especially will go it's a sign

that something is of a specific level of

designer or a specific level of value

just to be priced in that range. Of

course it's a tellier. Of course it's

not a blank and the positioning any

lower than that you're actually lowering

the customer expectation and you may

never even get a chance to exceed it.

And this makes sense. This is a

reasonable heristic in a world where

people can't try everything before

buying. Price things in an expected way

and know that underpricing is a brand

problem not just a margin problem. Then

we have charm pricing and rounded

pricing. So $9.99 versus $10. The

difference is 1 cent, but the

psychological difference is actually

much bigger. Prices ending in nine

consistently drive higher volume. This

is true in mass and value categories.

But in premium and luxury categories,

the opposite is true, the rounded

number. Basically, the $10 says, "We're

not trying to trick you into thinking

that $9.99 is a good deal. We know

you're smarter than that." You will see

that play out in a lot of luxury versus

value brands. And at the same time, you

have what we call lost price points.

$69. There's a reason why everything is

$59 or 99. If you go all the way up to

$79, you might as well be 99. 69 is so

much more than 50. You're looking for a

49. There's little things in there we'll

notice and people gravitationally pull

towards some of these price points that

make sense for them. So, now let's get

advanced and let's talk about pricing as

it relates to product and what different

products do to fill in the consumer

experience as a full product mix or how

all the products in a brand work

together. We'll get some concrete

examples. So, for instance, when you go

into an ESOP, you'll notice they have

affordable products, $27. You can get a

hand soap in the store. It's really

expensive for a hand soap, but it's

cheap for ESOP overall. This is what we

call an entrylevel product. It gets you

into the ecosystem. It's low risk. It's

high trial. They want to make sure you

have a banger for that low that lowric

product. So, they want to then buy more

cuz they had a good experience with it.

And then you'll get the core product,

the thing most people actually buy, the

real business. So for ESOP, a lot of

that is $60 to $100 skincare, expensive

premium skincare, an actual repeat

business that people buy into. And then

you'll have aspirational SKs, dream

pieces that sell very little that help

anchor the brand and move everything

else. If you've ever gone to a brand

page and there's a lot of denim and

shirts, but they have a $2,000 jacket.

That's an aspirational skew. And then

for ESOP, they have $200 kits and

fragrances. Position ESOP as a luxury,

not just a nice soap by really getting

into higher price points. And they don't

even take full advantage of this the way

some of the brands that we're going to

talk about do. And with them, that store

experience kind of helps close the deal,

right? And then we'll go into Halo

products. These might not even be for

sale. So, for instance, Palace had a car

that they put inside their shoot they

listed for, I think it was like 40 grand

or something. You actually buy the car.

District Vision when they launched

cycling at a $10,000 bike. It'll be like

a one of one. No one may even buy it,

but it exists to define the ceiling of

what the brand could be. And all of

these work in concert to build an

effective product mix. And you'll notice