The discount deception - Why dropping your price hurts you

Posted by Philip Huthwaite on October 14, 2014
Philip Huthwaite
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The University of Ohio did an interesting study that I thought you might find interesting especially if you’re a proponent of giving product or service discounts. The school had a theatre department that sold season passes for 10 shows that were put on during term time.

The results on the surface may be expected. Those who paid full price showed up more often than those who received discount passes. Now on first review you might attribute this attendance effect to sunk cost; i.e. those who paid the full price wanted to recoup their investment and get the most out of their passes by going to the performances after having spent $15.

But on second review, those who received the $2 and $7 discount missed equally as many performances. If the sunk cost was truly in effect, those who only received a $2 discount should’ve attended a few more shows than the group who received a $7 discount. But that did not happen.

What happened is something called Value Attribution; which simply means the inclination to superimpose or imbue a thing with certain qualities or characteristics based on our initial perception.

For the full article visit here.

 

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