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As shoppers, we are all too familiar with the strategy of luring us in with discounts and then gradually raising prices. We've all experienced it - we find a product we love and then the next time we go to buy it, the price has gone up. This pricing tactic is known as "end discounting gradually " and it's a common way for brands to increase their profits.
Rather than just having a temporary discount, this is about decreasing the discount over time until it's back to it's original price.
There are three different strategies.
Researchers examined all three price schemes for a EUR24.95 wine bottle stopper over 30 weeks. The progressive withdrawal generated the most revenue.
End discounts gradually are a popular pricing tactic, but what is the psychology behind them?
When a customer sees an item that is discounted, they are more likely to perceive it as a good deal and be more inclined to purchase it. This is because our brains are wired to seek out bargains and look for ways to save money.
If they saw the discounted price, but where to late to buy the product for any given reason they now see the increased price. It's still a good deal compared to the original price though. They are still likely to buy the product. It might even be the case they are more likely to buy it because of the FOMO (fear of missing out) effect.
How to end discounts in a way that won't alienate customers? Phase out discounts gradually, over the course of a few months. This will give customers time to adjust to the new prices.
Communicate the change in price to customers ahead of time, so they are not caught off guard.
This pricing tactic can also be combined with scarcity. If you have a product that's limited you could say:
Are you curious about how to apply this bias in experimentation? We've got that information available for you!
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