Brain Driven Brands: $7 Smoothies vs. $7 Deodorant - Pricing Psychology
Release Date: June 12, 2025
Host: Sarah Levinger
Guest: Nate Legos
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.
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."
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."
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?"
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."
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."
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.
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.
Follow Nate Legos:
- Twitter: @NateLegos
- Podcast: Tactical and Practical on various platforms
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Part of the Learn and Laugh series on the Quickfire Podcast Network, presented by Tether Insights.