Does the price of an item change your perceived value of it? If you price an aspirin at 50 cents will it relieve your headache better than an aspirin priced at a penny? Dan Ariely has quite a bit of research on the subject in his new book, Predictably Irrational.
Dan and his team created a fictional drug called Veladone-Rx and created marketing materials stating its wonderful pain killing effects. In the test, patients were brought into a room decorated as a high-end doctors office and handed a brochure for Veladone-Rx by a professional looking woman dressed in a business suit.
The full color pamphlet with an impressive logo touts that “Clinical studies show that over 92 percent of patients receiving Veladone in double-blind controlled studies reported significant pain relief within only ten minutes, and that pain relief lasted for up to 10 hours.” The price of one pill is $2.50.
Patients were then taken to a lab room and hooked up to a machine that gave them varying intensity electrical shocks. The participants were asked to record their pain on a computer in front of them after each shock. The range on the selection line was from “no pain at all” to the “worst pain imaginable.”
After a few minutes this first test is done. Participants are then offered a Veladone capsule and told that the pill will reach its maximum effect after 15 minutes. The test is then run again and almost all of the patients reported significantly less pain.
The results were amazing considering the Veladone pill was actually a standard capsule of Vitamin-C. The placebo effect was very great!
But what would happen if the price of the pill on the brochure was discounted from $2.50 to just 10 cents? The test was repeated on another group of volunteers, but this time the $2.50 price on the brochure was scratched out and replaced with a discount price of only 10 cents.
This time the results were considerably different. In the first test at $2.50, almost all of the participants reported pain relief. When the price was reduced to 10 cents, only half of them did. The effect was more pronounced on patients that regularly experienced pain in their lives.
The bottom line: You get what you pay for. Price can change your experience.
So how would price effect a personal development course?
Consider the following fictional courses.
The first course is a deluxe goal setting course with CD, helpful booklet, and step by step instructions. The benefits are listed in the ad along with a full color cover, motivational picture, and strong brand logo. The price is set at $79.00.
The second is a generic low cost toolkit. It too contains a CD, helpful booklet and step by step instructions. An outline of the contents are listed on the ad, but the whole package has a low cost look and feel to it. There are no implied benefits listed, but the price is a very reasonable $7.95
Looking at the ads, which package would you choose?
- Do you think you could successfully set meaningful goals with the low cost package?
- Do you think that the more expensive package would make you more successful?
- What if you were told that the material was the same, but the deluxe package had pictures, illustrations and video clips compared to the text based generic package. Would you still make the same decision?
Does the price make a difference?
Let me know what you think in the comments section.
And be sure to download our free goal setting toolkit!
Does free mean less value? Something to think about…