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- [00:01]
A
You know what's not fun? Spending your days in workflows, writing content and dragging blocks around the screen. You know what is telling ActiveCampaign's AI? Your marketing goals and watching it build the campaign for you. Emails, landing pages, follow ups done. It's the way marketing automation should be. Start your free 14 day trial right now@activecampaign.com that's active. Activecampaign.com what is up Marketing besties? We are kicking off a brand new miniseries called Go to Marketplace where we break down one go to market move in under 10 minutes. Real tactics, zero fluff. Just the kind of stuff you actually use to launch smarter, grow faster and win your market. And joining me for this whole series is someone who lives and breathes Go to Market, Tamara Graminski. She's an award winning, award winning product marketer, former VP of product marketing at Kajabi, and one of the sharpest minds in the game. Let's get into it. Welcome back to another episode of Go to Marketplace. Today's episode is one of my favorite psychological marketing tricks. You know when you're shopping and suddenly that middle tier option looks like a steal, even though you weren't going to buy anything at all? That's a little marketing trick or psychological trick called price anchoring. And when it's used right, it's like planning a psychological decoy that makes people feel like they're getting an amazing deal. Back with me today is the amazing Tamara Graminski and we're going to explore how to use price to influence your buying decisions. So, Tamara, welcome back.
- [01:52]
B
Thanks for having me back. So here's the thing. When we think about buying, like buyers are pretty bad at knowing what something should cost. Like when I go to the movies, I have no idea how much is like a good price to pay for my popcorn or if they're making an insane profit off of it or same thing. You know, I go to Lululemon and I buy some leggings and I really don't know if I should be paying $50 or $150. And so as consumers, we don't walk into these buying decisions with perfect information, right? We rely on the context. The context that we usually use is whatever is right next to the product that we're buying. So again, if I'm at Lulu and I see a pair of $100 leggings, but everything else in the store is $10, I'm going to think that feels kind of strange. But if everything else in the store is over $100, I'm going to think those leggings are a deal. And so that's where this idea of price anchoring comes in. It's the art of putting a decoy price or a strategically expensive offer next to your core product, the product that you want to sell to make it feel more affordable or more valuable, or oftentimes a combination of both. So really, you're subtly guiding the customer to purchase a very specific thing without the customer even knowing what's going on. So to show you how this works, Danielle, I've brought two examples with me today. I've brought kind of a classic pricing example, and then I've brought one to bring it back to B2B tech.
- [03:20]
A
And I'm just going to add another one in here, which I think people get exposed to every single day that they might not be aware of or might be aware of. But restaurants always have a very expensive steak or a very expensive dish that they know they probably not going to sell. But it just makes every other item on the menu seem a little bit cheaper. If you're a $200 steak, raising a price from 30 to $36 doesn't seem like such a big jump because you actually feel like, wait, something's really expensive on the menu. But I want to go into more relevant examples for people today. So you want to jump into those.
- [04:01]
B
Sure. Let's start with the classic example. So I'm going to talk about the Economist, which has a print edition and an online edition, and they ran a very famous pricing test. If you went to business school, you probably studied this test. But Basically they had three options. They had an online only subscription for $59, a print only subscription for $125, and then a print and online subscription. So both of those combined for $125. So the same price as the print only one. So most people actually chose option three because it felt like they were getting the print version for free. So then what they did was to further the study, they actually removed option two, which was the decoy. And so now you could buy the online only subscription, same price, $59. You couldn't get a print only subscription. So then you would get the print and online subscription, same price, 125. But suddenly far fewer people were going with that one and they were just going with online only. And so without that decoy of really kind of leveling the baseline of perception around what the print version was worth, the anchor disappeared. And the deal didn't feel as much of a deal as it did the first time around.
- [05:15]
A
It's actually kind of crazy because they had no intention of selling the second option at all, the Pronouni subscription for 125. They were just trying to make people feeling like if I want the two versions, I'm getting one for free. So it's like buy one, get one.
- [05:33]
B
That's exactly it. It was a decoy price, right. A package that only existed to nudge people toward the offer that they wanted them to buy. So I know not everyone is like working in the media space, so I want to bring it back to B2B tech. And you've probably seen SaaS pricing pages with three plans. It's often like good, better, best. And so let's use an example. Maybe it says basic, it's 1.49amonth growth, it's 199amonth. And then you have Pro which jumps all the way to 3.99amonth. The growth plan is the one they want you to buy. So this time they actually want you to buy the one in the middle. But it looks like a deal only because it's sitting between that entry level tier and the way more expensive pro tier. Right. So this was actually a pricing strategy that we used at Kajabi and if you go to the Kajabi website, you can even see it in action today. Yes, there actually were a few customers who would be a good fit for Pro, but for the most part, this was a decoy price to anchor everyone on the perception of value with that growth plan.
- [06:38]
A
Also, I know another thing you, I've seen you add on to pricing because I know you've done it for a lot of is putting something around that pricing as well to make it like, oh, this is the most popular. This is the best option. You also are highlighting that most people are getting this price, even though probably most people are getting that price. But it's something else you do. I also wanted to add on what it seems like is the best price. Product marketers know that pricing is perception and perception and marketing is your competitive edge. So I think going back to this, it's not always about pricing. It's about what you've been saying all along is how people are comparing pricing to other things around them. Let's be real, most of us didn't get into marketing to get buried in busy work. But here we are. The good news is ActiveCampaign's AI agents didn't take a lot off your plate. You tell it what you want. A welcome series, a follow up, a Full campaign and it builds it and then it gets it to the right people with email, SMS and WhatsApp automation. Try it for free for 14 days@activecampaign.com that's activecampaign.com.
- [07:55]
B
Totally. And when you think about, like go to market at a higher level, pricing isn't just a price point or like a revenue lever, it is a positioning tool. Right. It's something that we can use to help shape pricing perception of value. And you kind of led the way for me to go into my last part, which was if you know folks who are listening want to apply anchoring and decoy pricing in their own go to market. There's a few ways we can do that. The first one we've been talking about today, which is adding a decoy tier to shift perception. So you introduce that higher price tier, you make your primary offer feel like an amazing deal. And even if no one buys it, it reframes the value. But you hinted at this one, which was this idea of using kind of visual hierarchy or the concept of highlighting to showcase the best option. So often on a pricing page you'll see a little badge like most popular or best offer. That's definitely something you could do to draw the eye to where you want it to go. But then I'll add one final technique for people to think about, especially if you're more involved in the copy around what goes on the pricing page and maybe not as much in charge of the actual price point, which is how you deal with messaging. So you don't actually need to like influence the pricing to be able to influence how people buy. It's all about framing what is on that pricing page. So there's a few ways we can do this. You could do something like a strikethrough and say, this was this price, it's now this price. You can highlight the total value they'll pay versus or the total value that you'll offer them versus what they'll actually pay. This is really powerful if you have bundled offers or bundled products or we see this a lot, probably more in consumer goods, but we'll see things like real world comparisons, right, to frame how affordable the offer is. So something like for less than the cost of a coffee a day, you can get this product and it just helps kind of anchor in a concept that they already understand.
- [09:56]
A
I think one thing I also want to highlight as we finish this off is pricing is a lever. And sometimes you might not think that you can go influence pricing, but at least bring up the conversation as a marketer to say, hey, let's rethink how we're doing pricing. Let's add a decoy price in there. Maybe nobody's going to do this. Let's think how we're going to how we're going to package things differently. As a marketer, our job is to bring these stuff up. Maybe it won't go through, but you could do these other options of highlighting and other things. But what the main thing we're trying to say here is pricing is a marketing strategy. It is a strategy to help you sell more. So use it, talk about it, bring it up in meetings and use these three techniques Tamara brought up today. Well, thank you Tamara.
- [10:48]
B
Thanks for having me. Again.
- [10:53]
A
Thanks so much for listening. Keep tuning in to hear more great insights from the course Coolest marketers from around the world. If you haven't already, make sure to subscribe and follow the Marketing Millennials podcast on Apple Podcasts, Spotify, YouTube or wherever you get your podcast. And if you like what you hear, I would greatly appreciate you giving us a five star rating. It helps bring more marketers into our community.