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Confusion Pricing

 

DisciplinesMarketing > Pricing > Confusion Pricing

Description | Example | Discussion | See also

 

Description

Use multiple and constantly changing pricing structures so that customers are never quite sure what the real price is.

Ways of causing price confusion include:

  • Have a number of variants on the same product.
  • Mix in different service levels, warranties, etc.
  • Have various pricing tiers based on quantity and other variables.
  • Charge differently depending on delivery timescale and distance.
  • Have regular special prices, discounts and offers.
  • Vary pricing with seasonal demand.
  • Allow sales people to negotiate pricing.
  • Price more for decorative packaging.
  • Offer low-start prices for services.
  • Distribute varying vouchers that offer different discounts.
  • Have exactly the same products priced differently.
  • Put pricing on shelves but not on products.
  • Price items differently when they are loose as opposed to being packaged.
  • Price some items based on weight and other similar items based on quantity.
  • Use red price labels and larger signs (or whatever hue/style is used to indicate a sale price) so people are not sure whether an item is discounted or not.
  • Put regular items near expensive items so the regular items seem cheap.
  • When you have to indicate the price per unit item, use varying units (eg. kg, ml, oz, cl, etc.) for similar items so it is more difficult to compare them.

Example

A retail manufacturer, over several months, offers buy-one-get-one-free, three-for-the-price-of-two, special Wednesday discount and special gift packaged versions.

An airline changes the price of its seats based on a schedule that includes proximity of the flight, numbers of seats filled, seasonal factors and knowledge of the customer's past flight purchases.

Discussion

When customers know the price of the raw product, they will use this to compare it with competitors and also assess any deals using this baseline information. Keeping pricing fluid makes it difficult for them to do this, which also means you may use methods including price increases based on assessments of what the customer might pay. You can even do experiments in different regions to test pricing models without people realizing this is happening.

See also

Confusion principle

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