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The Brainy Business | Understanding the Psychology of Why People Buy | Behavioral Economics

Oct 12, 2018

I take framing one step further and talk about the power of numbers in today’s episode. This behavioral economics podcast will be a break from our foundation episodes. I get in to some of my most frequently asked questions (including ending prices in 99 or 97). I also talk about pricing strategies like using random or “interesting” numbers. I share research, examples, and how you can apply framing using numbers in your business.  

Before I dig in, I want to thank Justin from 52 Card Media, Jesse from Cinematic Syndicate, and Jennifer of Jennifer Findlay Portraits for making the website look so awesome. I have also transitioned to a new YouTube Channel and all the full episodes of this podcast are on it. Feel free to subscribe and share it with your friends.  

Show Notes

  • [09:17] Last week was all about the concept of framing. Today, we take that concept one step further by unlocking the power of numbers in your business.
  • [09:45] The way you say something is often more important than what you're actually saying. This ties back to loss aversion (which was the focus of episode 9) - remember framing something as a loss makes people twice as likely to take action than when it is framed as a gain.
  • [11:21] I talked a little bit about pricing and Episode 5. All of the things leading up to the price matter more than the number itself.
    [12:16] Is it really better to end something in 99 than rounding up to the nearest dollar? Should my prices end in 99 or 97? Should I have a random, but interesting number like 456.78?
    [12:55] It's (generally) better to round down in the 99 versus one dollar question. This works because you're bringing down the first whole digit number. 599 looks better than 600.
  • [14:24] Consistency is key. If you list your prices and have them one on top of the next, and they say, 399, 499, 999 and 2500 it is just weird.
  • [16:27] The great debate of 99 versus 97 (or even 95). Any of them are typically better than the rounded 0 because of the first digit difference.
  • [18:21] The LAST question on pricing is about using totally random and sometimes “interesting” numbers. This would mean instead of pricing something for $4,600 or 4,599 you would price it at $4,567.89 (so when you look at it the number reads 456789.)
  • [19:09] Making someone stop and say “what?” can be good if you're trying to disrupt the buying cycle.
  • [20:50] Journal of Consumer Research study called “This Number Just Feels Right” states that luxury pricing or other things bought on emotion (like a bottle of champagne) sold better when it was priced at $40.00 instead of $39.72 or $40.28.
  • [22:01] In another study on the pricing of a camera, participants favored the rounded prices (leisure/luxury/emotional purchase) and the non-rounded prices when they thought it was for a class project (function or looking for a deal).
  • [22:32] Bringing it back to FRAMING: the mindset that someone is in when they are going to buy from you matters.
  • [23:26] Confidence helps you sell and encourages people to buy.
  • [24:08] Statistics and numbers can be very persuasive when presented properly. They can also be negatively persuasive when presented wrong.
  • [25:16] Numbers help your brain value things and make comparisons. Which helps it to make a decision without flagging your conscious brain.
  • [26:22] Look for numbers in your business. People like to be part of the group and that is a big reason why framing in numbers matters.
  • [27:51] We make assumptions based on the numbers we see.
  • [28:49] Statistics like this work because people want to be like everyone else.
  • [29:39] To know what works best, you need to try different types of numbers.
  • [30:18] Four out of five has a better context in the brain than 78%.
  • [32:24] “Most” sounds better than 50%. You can also try to flip the framing the other way.
  • [33:42] Find a number in your business and look at all the different ways to present it. Let me know what works best for you.
  • [40:30] Episode 18, is back to behavioral economics foundations – when we will talk about priming. You won’t want to miss it! BE thoughtful.

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