This is the second article in a series of how what we’ve learned from behavioral science and consumer psychology of how to market events by influencing the perceived value of event ticket prices, discounts and promotions. In the first article I discussed the role of behavioral science in event marketing, pricing tickets based on perceived values, and the role of price anchoring in selling tickets for events. You can view that article here: Behavioral Science Can Transform Your Event Ticket Pricing.
This article will continue to explore the impact of cognitive bias and audience perceptions in event pricing.
Using Price Anchoring Bias When Marketing Events
As I stated in the first article, consumers perceive prices in a relative way. When purchasing products or services, consumers don’t know what things should cost when they start the process. This creates an opportunity for the seller to increase the perceived value of the buyer using what we’ve learned through the science of behavioral psychology.
The first price they observe for a product or service creates a frame of reference for all subsequent prices for that product or service. Put in another way; the first price they see will influence how they feel about the subsequent prices they see.
The lesson for event marketers is that they should utilize this cognitive bias in the way they present their ticket prices and ticketing tiers. How? By exposing potential customers to the high price first or at the same time they show another lower price.
Key Point: The higher price must also be perceived as reasonable, not outlandish or way overpriced.
Price Presentation Is exceedingly important.
The way we communicate prices is often overlooked in the process of setting and selling event tickets. Yet research has shown that how we communicate prices is important to influence how potential ticket purchasers will perceive the value of a particular ticket offering or discount. Hence, an understanding of price presentation effects is important for marketing events and venue operators. Small, seemingly trivial presentation changes can drastically increase your conversion rates because we don’t perceive prices rationally.
Comparative Price Advertising
Comparative Price Advertising uses price anchoring to contrast the higher “regular” ticket price or a “competitor” price with a lower price. Examples not involving competitor comparison for event ticketing include presales, early bird sales, various discounts, and promotional pricing. A lot of research has been done around comparative price advertising.
The higher price, i.e., price anchor, serves as the frame of reference, making the lower price perceived as a greater value. Consequently, comparative price promotions tend to engender more favorable consumer value perceptions and stimulate sales. That’s why it is so pervasive in advertising.
Beyond simply comparing prices, it also matters in the way we present those pricing comparisons. Here’s a few examples of what has been learned by consumer research when it comes to comparing one price with the original to influence consumer perceived value.
Color Matters: The Effect of Red Versus Black Prices on Price Perceptions
Yes, the color of ticket prices influences the perception, engagement, and buying behavior of consumers. In studies comparing prices presented in red versus black, potential buyers perceived greater savings when prices were presented in red than when the same price was presented in black. Males were found to perceive greater savings, expressed more positive emotions toward the ad and were motivated to purchase. Women also were more engaged with the ad and showed greater price recall.
The effect of red color lessened in cases where high involvement in the purchase process was high.
Size Matters: The Effects of Magnitude Representation Congruency on Price Perceptions and Purchase Likelihood
The size associated with the numerical value of a price may be the same as (congruent) or different from (incongruent) the size associated with a related price. This bias as equating value with the size of the price, i.e., smaller size equals more value when presented with a larger price and larger size for that price.
Results of such studies suggest that this consumer bias does not consciously affect the role of size representation. In fact, the research indicates that a congruent size representation between the two prices results in more favorable price value perceptions and lower price judgement. Put another way; when comparing prices, having both prices of equal size achieves the best results for marketers.
Display Location Matters: Consumer Evaluations of Sale Prices
Did you know that where we place the second price relative to the anchor price can affect purchasers’ perceptions of the price? Display placement can influence numerical cognitions, processing of sale prices, and subsequent evaluations. Again, this is based on what is happening in the minds of consumers, much of which takes place at a subconscious level.
Let’s begin by stating that the anchor price should always be where the eye is drawn to when viewing information that includes pricing for an event. In Western countries, that is the upper left or left depending on how information is presented.
Where you place the lower price in relation to the anchor price influences how consumers process and evaluate the difference between them.
What research has found is that vertical (i.e., columnar) placement of anchor and sales prices may result in a greater tendency to estimate discounts in relative (percentage) terms. Conversely, horizontal (i.e., side-by-side) placement may result in a greater tendency to compute the absolute dollar difference of the two prices. So you can influence how you want the sale price perceived with this approach. More about that below.
The results provide important implications for event organizers in terms of framing and communicating price discounts. Research shows that a price reduction associated with a high-priced product will appear more significant when framed in dollar terms, whereas a price reduction associated with a low-priced product will seem more significant when framed in percentage (relative) terms. Thus, event marketers can attempt to manipulate the circumstances that correspond to price level to obtain a more favorable consumer evaluation of the ticket discount.
What we do know from research is:
- A comparison of an event price to a competitor’s price is more likely to involve a relative assessment than an absolute assessment.
- A comparison of a sale price to a regular price is more likely to involve an absolute assessment than a relative assessment for high priced event tickets. More about that later in this article
- Vertical placement of comparative prices leads consumers to assess price discounts in relative terms than in absolute terms.
- Horizontal placement of comparative prices leads consumers to assess price discounts in absolute terms than in relative terms.
Discount Strategy for Event Ticket Prices
As mentioned earlier, your event marketing team can influence the perceived value of a discount by subtle pricing tactics. This also includes whether you give an absolute dollar amount or whether you give a percentage discount. Using the right approach can make a big difference in how the price is perceived.
Whether you give a percentage discount of a fixed dollar amount, how the discount is framed can make all the difference in the perceived value of the discount. Event marketing agencies and event organizers should use the “Rule of 100” when framing discounts.
The “Rule of 100” is a pricing strategy using psychology that suggests presenting discounts differently based on the original price of an item. For items priced under $100, a percentage discount (e.g., 20% off) will likely appear more appealing than a dollar discount (e.g., $20 off). Conversely, for items priced over $100, a dollar discount will often be perceived as more substantial than a percentage discount.
Other Psychology Pricing Tactics
Price Endings;
Price ending refers to the last digit or digits of a product’s price. The idea behind price endings is that certain numbers can be more appealing to consumers. For example, odd numbers may be associated with discounts or sales, while even numbers may be associated with quality and luxury. By choosing specific price endings, event marketers can influence consumers’ perceptions of their products and encourage them to purchase.
Odd-even pricing
This pricing strategy means setting a product’s price (in this case event tickets) ending in either an odd number, for example $29.95, or an even number such as $30.00 to influence consumer’s perceived value of the product. Research has shown that odd prices appear significantly lower than even prices, even if the difference is quite small.
Odd-even pricing can be an effective way to increase sales and profits. Consumers are more likely to perceive odd prices as a good deal and may be more likely to purchase. Additionally, odd-even pricing can create a perception of value, as consumers may assume that odd prices indicate the product is discounted or on sale.
Similarly, even numbers, such as $30, can be perceived as higher quality or more luxurious. This is because even numbers are often associated with stability and balance.
Odd-even pricing is commonly used in the entertainment industry. It is also used in pricing strategies such as bundle pricing, where a group of items is sold together at a price ending in an odd or even number. Odd pricing is especially useful for targeting value-conscious buyers. It’s also ideal for tickets discounts or sales meant to encourage impulse buying, e.g., flash sales.
Combining Odd and Even Pricing
Event ticketing can use both strategies to attract people who buy for different reasons. For instance, the anchor ticket prices might feature even-numbered pricing to signify quality. While other ticketing tiers or ticket discounts sale use odd pricing to indicate value. Examples include the VIP Top tier priced at $200, while the other tiers such as GA end in an odd number, say for a price of 39. Another example would be for the Anchor (regular) price to end in an even number, but the discounted price ending in an odd number. For example, the VIP price of $200 is discounted to $149.
Charm Pricing:
Charm pricing is also a psychological pricing tactic and a form of odd-even pricing. Charm pricing relies on the human brain’s tendency to focus on the first digit of a price. This tactic leverages the “left-digit bias,” which suggests that consumers focus more on the leftmost digit of a price. When a price ends in 9 or 99 (e.g., $19.99), the “99” is less prominent, and the brain tends to perceive the price as being closer to the whole number below (e.g., $19) rather than the next whole number up (e.g., $20). That’s why industries use charm pricing in many applications. It can increase sales by creating the perception of a lower price or “deal’ in the minds of consumers.
Decoy Pricing:
Decoy pricing is a marketing strategy where businesses introduce a third, less desirable option (the “decoy”) to make a target product seem more appealing by comparison. This tactic leverages the decoy effect, which makes customers more likely to choose the target product, even if it’s not the absolute cheapest or best deal.
Consumers change their preferences between price options when a third option is intentionally less attractive. This less attractive addition is the “decoy.”
The tactic involves introducing the decoy that is less attractive than the other two available choices but comparable to one of them in many respects. The decoy is designed to be a less attractive option, either due to price, quality, or perceived value, when compared to the target product.
Decoys Can Be Used for Price Anchoring
Seeing a decoy product on the left of three tiers with a high price becomes the price anchor and sets the purchaser’s expectations about price. Next, in the middle of three options is a comparable product that is much less expensive. As they view this option relative to the decoy anchor.
Decoys Can Work Both Ways
Decoy pricing can influence buyers to choose either more expensive or less expensive options, depending on how it is used. Remember that all three options must be displayed at the same time. The decoy price should be strategically placed alongside the product you want to promote, i.e., the target product, often with it in the middle. This allows consumers to compare, leading to a preference for the target ticket. People are naturally drawn to the middle option when given three choices, making the target ticket seem like the best value.
The decoy is designed to be slightly less expensive but offers less value than the target, making the target seem like a better deal. Customers are more likely to choose the target product, potentially leading to higher sales.
Decoy pricing can encourage customers to upgrade to a higher-priced, better-quality option. It can also help customers make decisions faster by presenting a clear comparison.
Another approach is to have the decoy that is priced to make the most expensive option, i.e., the premium option, look more appealing by offering substantial less value at price that is just slightly lower than the premium option.
We often see this approach at restaurants, movie theaters, and software subscription plans.
Examples:
- A restaurant offers a small, medium, and large soda. The small might be the cheapest, but the large seems like a better value in comparison to the small, especially if the difference between the medium and large is smaller than the difference between the small and medium.
- A business might offer three subscription plans: a basic plan at $15 a month, a premium plan at $30 a month, and a decoy plan that offers slightly fewer features than the premium but costs $28 a month. The presence of the decoy makes the premium plan seem more valuable, steering customers towards it, as it appears to offer a better cost-to-value ratio than the decoy.
- A concert promoter might offer three ticketing tiers: $40 GA standing behind seated tickets, $70 decoy (rear section limited view seats), and $80 premium (front section best seats). The decoy ticket, at $70, might seem like a better deal than the $40 standard ticket, but less of a value when compared to the $80 premium ticket thereby encouraging more people to purchase the premium ticket.
An Example of using decoy pricing to choose a less expensive target option.
- an event organizer offering three ticket options: Basic Ticket:$50 (the decoy, offers only general admission); Standard Ticket: $75 (the target, includes general admission, some perks, and a small premium); VIP Ticket: $125 (the expensive option, includes all perks, premium seating, and exclusive access. The basic ticket is priced to make the standard ticket seem like the better deal. The VIP ticket is expensive enough to anchor the pricing and make the standard ticket seem like a reasonable value.
Show the Benefits of Each Tier
When using decoy pricing tiers, you need to clearly distinguish the benefits between them. Highlight the benefits of the target product compared to the lower and higher-priced products. Make it clear why the target product is the superior option. When presenting the options, you can emphasize the target as the “best value” or “best choice,” further reinforcing its attractiveness.
Free Pricing Strategy
Zero price Effect
The aforementioned pricing strategies to affect the perceived price of a product can be superseded by what is known as the zero price effect. That’s because free is so attractive to consumers. Research demonstrates that customers will often choose from a variety of products based on which option has the highest cost-benefit difference. However, when items/offerings are free (zero price), customers use a different thought process and deem something that is free as having higher perceived benefits on top of decreased cost.
Decisions about free (zero price) offerings apparently take place differently than purchasing decisions for other priced products. People do not simply subtract costs from benefits but instead they perceive the benefits associated with free products as higher.
In other words, consumers or ticket purchasers perceive a higher value to free products.
Example:
50% off when you buy two tickets of the same tier. Now compare that to:
Buy one, get one free
The latter is a common retail promotion, often abbreviated as BOGO, where a customer receives a second item for free when they purchase one.
The reason is that while both approaches to pricing end up with the same price to the buyer, the latter takes advantage of the zero price effect with a higher perceived value.
Conclusion:
There are a myriad of ways event marketing professionals and venues can influence the perception of ticket prices. They include research proven strategies such as price anchoring, price presentation, discount strategy, price endings, and the use of decoy pricing tiers. Most events ticketing strategies will utilize a number of them when pricing and selling tickets.
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