$7 Smoothies vs. $7 Deodorant: Pricing Psychology

Summary

Brain Driven Brands: $7 Smoothies vs. $7 Deodorant - Pricing Psychology

Release Date: June 12, 2025
Host: Sarah Levinger
Guest: Nate Legos

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Introduction: Setting the Stage

In this episode of Brain Driven Brands, host Sarah Levinger engages in an honest and candid conversation with her guest, Nate Legos. The discussion dives deep into the intricate psychology behind pricing strategies and how consumers perceive value differently across various products and industries.

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Customer Math vs. Girl Math

Nate introduces the concept of "Customer Math," drawing a parallel to the popular notion of "Girl Math." While "Girl Math" refers to consumers rationalizing purchases (e.g., justifying the cost of a gift card as not being their money), "Customer Math" explores how customers mentally assess the value of products.

Nate [02:18]: "Girl math. I truly believe there's something called customer math. I think customer math also exists."

He highlights the disparity in how consumers value identical price points differently based on the product category. For instance, consumers might balk at paying $7 for deodorant but readily spend the same amount on a smoothie.

Nate [03:15]: "$7 for deodorant is like, way too damn expensive. I'm not paying $7 for deodorant, but a $7 smoothie. 100%. I deserve that."

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Emotional Accounting: The Heart of Pricing Perception

The conversation shifts to "Emotional Accounting," a term Nate coins to describe how consumers balance the emotional rewards against the price of a product. This concept underscores that purchasing decisions are less about the numerical cost and more about the emotional value attached to the product.

Nate [03:53]: "Emotional accounting is what I'm calling it... customers are doing a lot of this, like, emotional math in their head."

Sarah concurs, emphasizing that consumers are "value sensitive" rather than merely "price sensitive." She illustrates this with personal anecdotes about purchasing decisions that prioritize perceived value over cost.

Sarah [05:15]: "Customers are not price sensitive. They are value sensitive."

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Branding and the Halo Effect: The Aston Martin Example

A significant portion of the episode delves into how strong branding influences consumer perception through the halo effect. Using Aston Martin as a case study, Sarah and Nate explore how the brand's association with the iconic character James Bond elevates its perceived value beyond the functional utility of the product.

Nate [07:16]: "The halo effect. So, anything around something cool gets kind of, like, a benefit of really just, like, Living in the sunshine around that cool people."

They discuss how emotional connections formed through media and cultural icons can make consumers willing to pay a premium for products associated with those positives.

Sarah [07:50]: "He’s not real... So why does the value of the brand increase for a character that's not real?"

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Bundling Products: Increasing Average Order Value (AOV)

Nate shares his experience with bundling products to enhance perceived value and boost sales. He recounts how offering a bundle of pocket watches, despite the seemingly impractical nature of purchasing multiple units, resulted in significant sales success.

Sarah [12:11]: "We've sold over half of them already, so they're probably gonna be sold out by the time this podcast comes out."

Nate explains that bundling provides consumers with a perceived discount and aligns with their emotional valuation of the product, thereby encouraging higher spending.

Nate [13:20]: "Perception is everything, people. And especially in this particular case, you're selling four freaking pocket watches."

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Marketing Implications: Understanding and Leveraging Perception

The duo underscores the importance for marketers to understand that price is secondary to the emotional and psychological factors that drive purchasing decisions. They advocate for strategies that enhance perceived value through branding, bundling, and providing multiple purchasing options.

Sarah [16:01]: "We didn't have to do anything to the products... If you're not communicating that through visual and written content, and if you're not giving people the opportunity to show you how much they value your product, then you're never going to make more."

Nate adds that offering various options and bundles allows consumers to allocate their spending in ways that feel personally rewarding, thereby increasing overall sales and customer lifetime value (LTV).

Nate [14:10]: "You are actually holding yourself back just by not creating enough options for people to buy more with you."

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Personal Insights: Balancing Business and Emotions

Towards the end of the episode, both Sarah and Nate share personal reflections on balancing business strategies with emotional well-being. Sarah expresses frustration with industry pressures, while Nate discusses his own struggles with pricing and bundling in his business.

Sarah [10:34]: "Between now and whenever I buy that car, probably in years, by the way, because I think a minivan is more likely for us in our future."

Nate [15:43]: "My AOV struggled a lot, and my LTV in particular, because it was just I didn't give people enough options. I didn't bundle enough stuff together."

They conclude by emphasizing the critical role of emotional connections and strategic pricing in building successful, customer-centric brands.

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Conclusion: Key Takeaways for Marketers

This episode of Brain Driven Brands offers valuable insights into the psychology of pricing and consumer behavior. Key takeaways include:

• Emotional Accounting: Consumers assess purchases based on emotional rewards rather than just monetary cost.
• Halo Effect: Strong branding and emotional associations can elevate the perceived value of products.
• Bundling Strategies: Offering product bundles can significantly increase sales by enhancing perceived value.
• Value Over Price: Emphasizing the value and emotional connections of a product can lead to higher customer satisfaction and increased lifetime value.

By understanding and leveraging these psychological principles, marketers can craft more effective pricing strategies that resonate with consumers on a deeper level.

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Follow Nate Legos:

• Twitter: @NateLegos
• Podcast: Tactical and Practical on various platforms

Subscribe to Brain Driven Brands:
Part of the Learn and Laugh series on the Quickfire Podcast Network, presented by Tether Insights.

Transcript

[A]

Welcome back to Brain Driven Brands. We're recording this on a Friday afternoon after a long week. Sarah's angry. We've been talking about cocaine for the last 30 minutes. Welcome to the show. How are you, Sarah? I'm doing.

[B]

I'm doing.

[A]

I don't know the intro to this podcast going.

[B]

That was such a great intro. First of all. Thank you. Second of all, I feel bad because all these days that I get, like, kind of cranky about my job and about the industry and, like, everything, it's just hard. All of this is just so hard. And then I take it in to, like, consumer Casey, and he's like, aha. Like, he does. He doesn't, like, live in our realm of marketing and, like, kind of hustle culture and, like, all these different things. He lives as a consumer. So he's out here like, I'm gonna go golfing today. And I'm like, great for you. So happy that you are having fun with your life. Meanwhile, I'm over here just, like, drowning in tariff tweets where everybody's like, the world is ending, the sky is falling, so everybody get ready. There's no lifeboats left. I'm like, cool.

[A]

Can I give us, like, a quick 30 seconds of, like, gratitude? Try to turn this day around for us?

[B]

Okay, let's do it.

[A]

All right, Me and you. Ready? We sit in air conditioned offices all day long.

[B]

We do. It's a good place.

[A]

Sit in comfy chairs.

[B]

Yeah.

[A]

We press buttons and talk to people, and we're like, oh, no, this is hard. And not a flex too hard, but, like, we make pretty good money.

[B]

Oh, God. All right, fine. How come you get to have bad days? I, like, try and cheer you up, and you're like, nope, I'm just gonna be mad.

[A]

My anger is more resilient than yours. It's deeper. It's been here for longer. It's more stubborn.

[B]

Oh, God.

[A]

My anger's been through.

[B]

You know, sitting over here, just being like, is it really as bad as I think it is? No.

[A]

No.

[B]

Probably.

[A]

Yeah.

[B]

Scotty says Nate was born angry. You know what? Anger is actually a really good emotion just based upon how much I know about emotions. It teaches you a whole lot about where your boundaries are and about which boundaries have been crossed, should you feel it, especially if you feel it intensely. I'm still gonna be angry today, so just. So.

[A]

Today, what do you want to talk about?

[B]

I want to talk about a tweet that I had that popped off because sometimes it makes me feel better that somebody's Looking at my content.

[A]

Douche. Way to start a podcast.

[B]

Why not? That's. There we go. Here we go. We're just gonna get into it. So this one was not viral. I don't know what viral means, honestly, especially in context. For my stuff, though, this one got 17,000 views, got a decent amount of likes. Decent amount of, like, what do you call those saves, like bookmarks. And it was talking specifically about customer math. Do you know anything about customer math?

[A]

What do you mean, customer math?

[B]

You didn't see this tweet?

[A]

I'm a busy guy, okay? Got a full time job. I host another podcast.

[B]

Sweet. Now I'm upset. Okay, you've heard of girl math, right? Where it's like, hey, if I get a gift card for Starbucks, it doesn't count because it's not my money. Somebody else's money. Girl math. I truly believe there's something called customer math. I think customer math also exists. And this is what happens when we see weird shit like $50 for shipping. Outrageous. Not paying for that. $50 for same day delivery. 100% a steal. Yeah, I could pay for that.

[A]

Yeah.

[B]

Customer. Matt, $7 for deodorant is like, way too damn expensive. I'm not paying $7 for deodorant, but a $7 smoothie. 100%. I deserve that. I'm going to treat myself today. Yeah, because smoothie, though, right? Same for you guys. Which I find really interesting because you were talking about something earlier about like the perception of value is just drastically different based on products, industry circumstances. Like, you could have somebody who thinks $100 shoes is like, ridiculous, but $150 serum for your face. Yeah, totally. Self care. I can buy that.

[A]

Yeah.

[B]

So I want to talk about this emotional accounting that customers.

[A]

Emotional accounting.

[B]

Emotional accounting is what I'm calling it. And I hope to coin that term so that somebody will say, Sarah said that.

[A]

Watch out. Sarah's doing the marketing guru thing of coining a new term.

[B]

Coining a term. It could be attributed to me. Somebody say that I know things.

[A]

That would be emotional accounting.

[B]

Emotional accounting. So you're. I think. I really think customers are doing a lot of this, like, emotional math in their head. Right. Because at the end of the day when our conversion rates are kind of stalling or whatever it is, it's not really our price that's the problem. It's how we're positioning it. It's how we make people feel about the actual purchase itself. So I don't think customers really calculate anything based on price. This is Sarah's hot. Take. Customers don't calculate things based on price. They calculate based upon the emotional reward compared to the price, and it's always, always attributed to what the product is. Now, for you guys.

[A]

Yes, yes, yes. Hold on. No, I'm not done harping on what you just said.

[B]

Okay?

[A]

Customers are not price sensitive. They are value sensitive.

[B]

Yes.

[A]

Like, and I think that's something that is so misunderstood and underestimated. We talked about it with all the examples you just gave. We taught. We talked about it on the episode about me buying a car. I thought 70k for a Bronco was insane, but a different car that was more expensive I bought that day. So, like, there's so much of this stuff that happens, and that's why I tell people to test their prices all the time. Because we've seen when we launch new content that does a better job of showcasing the value of our products, then we can test a higher price and.

[B]

It wins every time. Yep. Yep. At the end, I. I really think this is, like, critical that marketers understand that the price is arbitrary. The price is basically just a secondary player in what's happening before that, which is all of the brain processes that are in play to try and understand, is this product worth it? To me, is the product worth it? Not, is the price worth it? The price has nothing to do with the price is basically just, like, one of 70 different things they're checking inside their head.

[A]

Let me give you one more example. Okay.

[B]

Okay. I'm ready.

[A]

Because this. This came up in a conversation with my wife this week.

[B]

Okay.

[A]

Because I'm. I. I want to buy. I want to buy, like, a vintage Aston Martin. Okay.

[B]

Oh, hell, yeah. I love Aston Martin. Those are good.

[A]

Talked about it.

[B]

Yeah.

[A]

So we're talking through, like, what's a good deal and what's not, and it came up that, like, hey, if. If someone today tried to sell me a minivan for 30 grand, I'd be like, yeah, yeah. Nope, nope. I don't have 30 grand to spend today. That's insane. Don't want it. But if someone gave me the vintage Aston, the exact one I wanted for 30 grand, I'd be like, all right, Steph, call the bank. Move a little bit of money from there to here. I have to go withdraw.

[B]

I have to go get this car. Yeah. Now, isn't it interesting? They're both vehicles. They both do what you want them to do, which is like, drive me from A to B. One of them, though, comes with a title that means something different than the other One. Yeah. Now, the title is fascinating because how did that title get the value placed on it that it has? How is it just because it's been around for a long time. Why is Aston Martin any, like, better of a brand in your brain than, like, Chrysler, like a minivan?

[A]

Why you asking me?

[B]

Seriously, why?

[A]

Because it's a sick brand. Because of James Bond.

[B]

Oh. Because the James Bond. Okay, so there. There you go. So sick brain is arbitrary. That's general. Right. So that makes sense, because sick brain could be different to all kinds of people. The James Bond reference, though. So that showed you immediately where your brain goes and what it's attached to. Yeah, the James Bond. The name's Bond. James Bond is a character. He's a fictional character. He doesn't even exist in the real world.

[A]

But if you think about it, well.

[B]

They'Ve done studies on that. It's scary. I'm not going to get into that because it terrifies me. Okay, so anyways, James Bond, fake character, not real movie guy, very suave chic. He's got women all over him, lots of money. I'm also a detective. I, like, solve things, and I kill a lot of people in the process, but I do it in a really cool way. That's kidding. That, like, that's a piece of your brain that gets activated when you think of Aston Martin. Like, yeah, he's not real. He's not real. He's not real. So why does the value of the brand increase for a character that's not real? Nate.

[A]

No, because he's not real. But the way that people react to him is how people would react to a guy like that in real life.

[B]

Okay? So as charming as you are, Mr. Bond, I will be keeping my eye on our government's money and off your perfectly formed house. You noticed, even accountants had imagination. Ah, so now we're getting somewhere. So perception, emotional value, right? This emotional accounting that people do is attached predominantly to the emotional response that people have with specific things that exist inside their ecosystem, inside their, like, world they're living in. James Bond is really interesting because his character is very freaking cool. And a lot of people, men in particular, wish that they were him or wish they could have that kind of experience. And so they'll attribute anything around him to what he signifies, which is, like, this strong male character who can do whatever you want, who's very, like, edgy and cool. Now, the interesting part is that's called the halo effect, right? So anything around something cool gets kind of, like, a benefit of really just, like, Living in the sunshine around that cool people. You've seen this in high school, when the popular kid pays attention to the non popular kid, and then that non popular kid gets cool for half a second.

[A]

Yep.

[B]

The halo effect. So what else do you attribute to Aston Martin other than James Bond? Is there anything else that comes up?

[A]

That's basically it.

[B]

That's it.

[A]

I don't know. I mean, like, I watch Top Gear growing up. Love the those guys. They like Athens.

[B]

Okay.

[A]

I like the Formula one team Aston Martin.

[B]

This is really interesting. So, like, there's a lot of TV involved.

[A]

There's a lot of TV involved.

[B]

Yeah. Lots of TV involved in your association with this particular brand. My brain is going to, like, 100 different miles an hour now because I'm like, you would be willing to drive. Because I'm driving an Aston Martin in my brain. You would be willing to pay $30,000 for a car that the value is really only built on tv.

[A]

All right, you know what? I don't want to do this podcast anymore.

[B]

I think this is amazing, and I think you should 100% buy because one I love.

[A]

Let's get off of my fucking insecurities that I'm trying to cover up with material items for a minute, if we please. Can. Let's get back to the point of this. Between now and whenever I buy that car, probably in years, by the way, because I think a minivan is more likely for us in our future. The point is, like, I'm saying, I would do that today. I'll also turn down a hundred things that only cost 500 bucks in the next six months because of money.

[B]

Ah, well. And this is where I think this is, like, eye opening for any marketer who's, like, watching or listening to this particular episode. Value really does come down to indoctrination. Indoctrination is massive for any sort of marketing process. Nate has a very definitive emotional response to Aston Martin, but it's because he's been experiencing it for years and years and years, and he's got all kinds of different emotional responses that came up for this specific brand. So value, whether you're selling deodorant like Jamba Juice or watches, has to do with how many emotional experiences have I had with this brand and for how long. Key now I want to talk about bundles for a second. I'm shifting over because you and I talked about this, like, briefly before this episode, and I think your bundles in particular come heavily into play when it comes to this marketing conversation we're having, because you have bundled together something that I thought, no human on the planet will purchase that bundle. No human would like. No rational human would go, yes, I need that. So tell me this bundle that you're building. Because I'm like, no, this is when I launched today.

[A]

So we. So we launched a collection of pocket watches today.

[B]

That's right.

[A]

This morning. We've sold over half of them already, so they're probably gonna be sold out by the time this podcast comes out. But one of the things we've been doing when we launch every new collection is we create a bundle of everything in that collection and sell it for only like 15 or 20% cheaper. So we have a 4 pocket watch bundle right now that many people are buying today. And it is. That product is our highest revenue generating sku on our store today. And it's crazy because, yeah, logically no one would ever need this. No one needs a pocket watch either.

[B]

Yes. Who needs one pocket watch?

[A]

There are enough people out there that when given the option, will take all four of them.

[B]

This is the craziest thing I've ever heard in my entire life. And this is why I find perception of value so interesting. Especially because people always attribute a value to price. Every marketer I've ever met was like, value price. That makes sense. And I'm always like, you could jack your price up 10x and people probably wouldn't notice it as long as the packaging was a little nicer.

[A]

Correct.

[B]

Perception is everything, people. And especially in this particular case, you're selling four freaking pocket watch.

[A]

Well, and let me say what I told you before the episode was people never used to buy multiple watches.

[B]

Yeah.

[A]

Until we started creating these bundles.

[B]

Yep.

[A]

And it just kind of proved our theory of like, maybe the reason our AOV isn't growing, maybe the reason people aren't spending more money with us is because we're not giving them the option to.

[B]

Yes, yes.

[A]

And every time we've given them the option to, it has worked out for us. And I think most econ brands are like this. Like, I think people will buy more from you will take out more of their dollars for you if you just give them something to put it into.

[B]

Give them the option. Yes. I don't think people quite understand that, like you are actually holding yourself back just by not creating enough options for people to buy more with you.

[A]

Yep.

[B]

This, and this is something I struggle with my own business. Right. So I had like a very, very low tier product that was like consulting. It was like in the thousand dollar range. And then I had A very, very high one that was like 7k plus, and I didn't have anything in between. It was just like, you get this or you get this. Which one do you want? And people were often like, well, that's a difficult choice because I need a lot of the things that are included in both packages, but I can't afford the higher tier one or the lower tier one. Doesn't seem like it's going to get us enough. So I struggled with that for the past 18 months, trying to figure out what should I give people so that they can get enough value off of what I provide, which is this exact stuff. Shameless. Plug. If you want to figure this out for your brand and you want to come in and get, like, pricing psychology, understand the value of what you're actually providing to your customers. Like Nate is, you could come work with Sarah. But also, this is half of my problem. So my AOV struggled a lot, and my LTV in particular, because it was just I didn't give people enough options. I didn't bundle enough stuff together. So this is interesting. You guys went and did something, and this is directly off of this tweet that this whole conversation is off of. You guys actually found the emotional equation, like the math that your customers were doing in their head very, very quickly. You were like, nobody buys multiple watches in one sitting. They don't go, add to cart, add to cart, add to cart. Let's just bundle them all together in one big add to cart and see if they'll buy. So we figured out very, very quickly that the issue wasn't price. The issue wasn't the price. As, like, most marketers would think you. Your issue was probably actually more what's the word? Capability, which. We just talked a little bit about this.

[A]

A little bit. Opportunity.

[B]

We'll do a full episode. Yeah, opportunity. There was just basically nowhere to get it. Like, it just didn't exist. The second thing you did, though, is you reframed the value. You kind of shifted the price justification to more of an identity thing. If you are a Jack Daniels guy and you really are what you say you are, you'll buy four of these pocket watches.

[A]

Yeah.

[B]

Instead of just the one. So you reshifted the value and it was like, okay, I'll buy it. Yeah, absolutely. And then you did a really good job of kind of matching the moment. Right. So you gave them a moment to experience kind of the emotional attachment to the brand because they've been with you long enough that now they're like, yeah, this is who I am. This is what I want. You've given me the opportunity, and now it's all coming together in one specific moment.

[A]

Yeah. And what I think is really interesting here, too, is, like, we didn't have to do anything to the products.

[B]

Like, yeah, you didn't have to change product at all.

[A]

Yeah. And like, I think it's like, if I told you I want you to pay me 500 grand a year to come run advertising for your business, you'd be like, I don't know, it's a little bit steep, but if David Ogleby was around, he'd be like, I'll find a way to pay him that for him to come run our ads. And, like, again, it has nothing to do with price ever, and always has to do with value. If you're not communicating that through visual and written content, and if you're not giving people the opportunity to show you how much they value your product, then you're never going to make more. But it's sitting there waiting for you.

[B]

I also would like to point out that Ogilvy also ran campaigns that flopped. He was human, too. Like, that guy probably had quite a few in his career that just were shit. Didn't produce anything at all. But the fact that he had very definitive moments that defined his career that somebody else talked about. Enough now. He's like the Godfather of everything. Perception comes down to again, how many emotional experiences can I have with a person? How heightened were those experiences and how long did I have them? That's it.

[A]

I was gonna use Don Draper, but then you're gonna on me for more television. Fictional characters. And I was like, I can't do that.

[B]

What TV do you watch?

[A]

Is the question, Am I. I don't.

[B]

Have time to watch tv. Like, I don't even remember the last time I watched tv. I. I watch reruns of things now because I'm like, it's a Tuesday. I haven't watched TV in, like a month.

[A]

Kids.

[B]

I'll sit down and watch. Yes. Everybody commandeers. My TV is half the front. This was such a good episode. I love deep diving on this particular topic. Pricing perception is one of those things that I think people are really interested in the topic, but they don't know how to get more information on.

[A]

It's the. It's the biggest misunderstood thing of, like.

[B]

It really is all time.

[A]

Because, like, again, I could offer you, I have a Ford Fiesta that's been sitting in my driveway for three years that we haven't driven. I could ask you to Buy that today for three grand. And you'd say, no. But if I wanted to sell you my other car for three grand today, you'd be like, yep. Because, you know, worst case, you can flip it and make a ton of money on it.

[B]

Yeah.

[A]

And it's like, it has nothing to do with the three grand at all.

[B]

Nope, nope. That's the reason why I have a Tacoma. And it hasn't depreciated. We've owned that thing for, like, five years. Hasn't depreciated.

[A]

Truck prices are insane.

[B]

Yeah. Tacomas especially, man, those things hold their value. Everyone talks about profit this year.

[A]

The privilege of people who got a mortgage before 2020, people who bought pickup trucks before 2020. Real winners. Because I can't afford one individual.

[B]

You cannot get a truck. They're so expensive. Which is weird. Don't you think that, like, in this economy, I'm going to use a term that you use all the time in this economy? Why would anybody want a truck? It makes no sense at all, but everybody wants them right now.

[A]

Yeah.

[B]

High demand.

[A]

I get so annoyed when I see people with nice trucks, and I'm like, you don't even live on a farm. Like, what are we doing? Your boots cost three grand. What are we doing?

[B]

That's me. I own a truck and I live in the middle of the city. So it's me. It's all me. Anyways, where can people find you if they want to follow your journey or learn more about what you're doing?

[A]

You can follow me on Twitter at Nate Legos. I'm trying to post on LinkedIn more. It would help if you guys gave some love on that content to make me feel like I'm not wasting my time. Or after this episode's over, you can search tactical and practical on whatever podcast platform you enjoy, and I'll be over there talking about some random.

[B]

Hell, yeah. I actually listen to a lot of your episodes. I learned a lot from you about, like, really running a business. Yes. Because, again, I feel like that's one of the places that Sarah's skill set lacks in particular is operations. Because I've been in marketing for so long. Like, my job is to sell. That's all I've done for my whole life, and I'm very good at it.

[A]

But I want to do a whole episode on, like, marketing ops, because it's a whole other thing.

[B]

I would love that.

[A]

Like, people don't understand, like, no, you got to build systems and Playbooks and, like, repeatable processes, because it doesn't matter how good you are at creative strategy or media buying or anything else, if.

[B]

You can't replicate it, can you sell that as like a, like a playbook or a course or. I know you love those things and you don't wanna. Okay, I'll just, I'll pay you. Then you can come in and take a look at my marketing processes because they suck.

[A]

Great. I'll do that.

[B]

My marketing process is post whatever's in Sarah's brain today. So if you want to follow Sarah Levenger everywhere you can see the content. You go see what's in Sarah's brain. There's a lot of weird stuff like this and I think about very strange things. Yeah. So come follow me everywhere you want to follow me and that's all I got. So like subscribe. Brain Driven Brands is part of the Learn and Laugh series on the Quickfire Podcast network and is presented by Tether Insights. For more information go to tetherinsights IO.