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Location Effects in Pricing

 

DisciplinesMarketing > Pricing > Distance Effects in Pricing

Description | Example | Discussion | See also

 

Description

The distance between a price and the product, or even a description of the product, can have an effect on how people perceive the price in relation to the product. In particular, the closer the price is to the product, whether in a catalog or in a shop window, the more the customer will associate the price with the product. And vice versa, of course.

It can also be significant where the price is located relative to the product. When the price is above or to the left of the product (or its description) it is seen first. In documents, it is common to see it to the right and people will look there for it. It may also be below it, which is more common in shop displays. The price may even be somewhere completely different.

Example

A fashion store puts clothes on mannequins, which are on pedestals. The price card is placed right on the floor, leaning against the pedestal, making it visible but not immediately obvious. Customers hence focus first and for longer on the clothes, only finding the price with extra effort.

A high-end car showroom does not display prices, preferring customers to fall in love with a car before the high-price ticket is told to them verbally by a sales person.

A manufacturing tool company shows products in a catalog. The price is in a separate list, with prices against product codes rather than product descriptions. This allows them to change prices without having to change the catalog. It also allows for individual negotiations without a fixed price acting as an anchor.

Discussion

Because of our writing system, we read anything, including images and general sights, from top to bottom and from left to right. This means we will encounter things which are above and to the left first. By convention, in written documents the price is shown shortly after the product. This encourages the person to read about the product first. It also makes the customer feel more comfortable as things are as they expect them to be.

Putting the price above or to the left makes sense when the price itself is an attractive component, for example in low-cost stores or in sales.

When prices are seen at the same time as the product, the customer may focus first on the price and move on without even considering the quality of the product. In such cases, the price may be displayed more distantly or even completely hidden.

See also

The Price Anchoring Effect

 

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