Mar 9th, 2007
Price Tag Psychology
I’m frequently frustrated when I can’t easily find information like price, but it seems hiding the price can avoid an almost literal sensation of pain when it comes to pricing. While I’m aware of other research on pricing, such as the Disrupt and Reframe technique, and some work by Robert Cialdini on which to present first, the more expensive or the less expensive item (the less expensive item - since you “anchor” the higher price, the lower price seems even lower by comparison - infomercials exploit this all the time), this is the first time I’m seeing research into the neuroscience of pricing.
… research by Carnegie Mellon neuroscientist George Loewenstein and others showing that high pricing caused higher activation levels in a brain area associated with pain. High priced items which lit up the insula were less likely to be bought by the subjects in Loewenstein’s experiment.
In an interview with Loewenstein, he pointed out that techniques that disguise the price of an item, like “luxury packages” of automotive options that never identify how much you are paying for specific items like leather seats or the better stereo, effectively reduce the negative activation and increase the probability of purchase.