The Perfect Pricing Formula with Deborah O'Malley

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[00:00:18] Sani: Welcome to no hacks show, a weekly podcast in which smart people talk to you about better online experiences. The topic for this week is the perfect pricing formula and my guest quite literally wrote a book about it. She's the founder of guest test host of can you guess the test CEO of convert experts and a top a B testing influencer.

Deborah O'Malley, welcome to the show.

[00:00:40] Deborah: Hi, everyone. Thanks so much. It's great to be here, Sunny.

[00:00:43] Sani: Great to have you. So the first question that I have for you today, it's not the animal question because you already told me that on LinkedIn. Um, It's a question from Linda Bustos, our mutual

[00:00:53] Deborah: Oh, now I'm really scared. Oh, boy.

[00:00:56] Sani: it's not, it's not, no, nothing to be afraid of. How does pricing psychology differ across luxury brands versus fast fashion or cheaper brands?

[00:01:05] Deborah: Yeah, that's a really great question, and I actually happen to have what I hope is a really good answer, or what I hope you deem is a really good answer. So, pricing is All about how you portray your product and you can take something and make it seem luxury, or you could take something and make it seem discounted.

And it in fact, can be pretty much the same good or service. For example, my son is really into very expensive Nike shoes. Um, you can pay tens of thousands, even hundreds of thousands of dollars for Nike shoes. Those exact same shoes that are. probably made in a sweatshop factory somewhere

[00:01:47] Sani: Yeah.

[00:01:48] Deborah: uh, can also be what are called rep brands.

And you can buy rep brands on a discount site like Pandabuy or DHgate for a fraction of the price. You can pay 60 or 80 rather than 12, 000 for the exact same shoes. Now the reps So they don't have, you know, the official Nike, uh, the tag doesn't go, come back as fast as it's supposed to. Um, but the shoes for all intents and purposes to, you know, a naive eye like mine look exactly the same and they're a fraction of the price.

And it's all about how you portray the price. So pricing psychology is a huge, huge factor in it. And you can have these incredibly luxurious goods that, are priced very high, but really they're, you know, manufactured and made the same way as a cheap good that you could find in a dollar store.

[00:02:44] Sani: It's all about the

[00:02:45] Deborah: about the way you portray it.

[00:02:47] Sani: Yeah. This turn going into 12, 000 shoes is not something I anticipated we do today, but I appreciate it. I love the answer. And thank you, Linda. Shout out to Linda, the reigning champion of guess the tests, the only person to win two times in a row. Exactly.

[00:03:03] Deborah: if she can protect her title.

[00:03:05] Sani: my ass in the last one. So congratulations, Linda. And thank you. Uh, I, I was checking your bio in, in the book about pricing that you wrote and one thing stood out to me. It's, it said that you were always fascinated by what users pay attention to.

[00:03:19] Deborah: Yeah,

[00:03:20] Sani: And I think you cannot do CRO if you don't have that, that kind of thing or testing experimentation.

So when was the first time talking about digital and websites and digital experience, what was the first time you noticed that you really want to know how this thing works and not just use it?

[00:03:36] Deborah: Yeah, so I am really dating myself here, but I was born before there was such a thing as websites. There was hardly even computers when I was a kid, and I, you know, had no idea I would go into the field of CRO because simply it didn't exist. And so I remember in about grade four or five, for a science experiment.

We were allowed to choose any topic we wanted. It just had to be hypothesis based, and we learned about the meaning of a hypothesis. And other kids were taking diapers and pouring apple juice on the diapers to see how much pee the diapers absorbed. I didn't care about that. I wanted to know what people saw, and so I cut out different shapes and colors of construction paper, and I posted them on a board.

And I would ask people, what do you see first? And they would I was really interested in that. Far from statistically sound or rigorous, it was, you know, a low sample size, not very valid experiment, but I was fascinated by what do people see first? What draws attention? Is it shapes? Is it colors? Is it a combination of both?

And, you know, I didn't get really very meaningful results at all, but fast forward many, many years later in a very Syracuse district, and I ended up pursuing a master's of science degree where I specialized in using eye tracking technology. To see how people look at ads and, uh, They were print ads that were on a screen, so digital ads.

And from that, it really kind of put the pieces together for me. I said, oh my god, this is what I've been trying to do all my life. And it really drew out that you can get users to pay attention and focus on certain things by visual prominence, by the copy you use, or the lack of copy you use, or the lack of imagery you use, the way you frame the message in a negative or positive way.

And you can really influence perception. Perception of price is part of that, and attention as well, just from placement of elements. And so I've, I think I've been born with that mindset. I, you know, consider myself to have an optimization and an experimentation mindset. I bring it into my everyday life.

Uh, but yeah, I think from a very young age, I was really drawn to this and fascinated by it.

[00:05:44] Sani: much juice did the diaper hold though that that is that is the real follow up question

[00:05:49] Deborah: the funny thing is, and I remember it so vividly because they ended up winning the science fair at my school, and I was like, what? That is what won the science fair? And I think they were testing Pampers versus Huggies or something

[00:06:02] Sani: That was sponsored that had to be a sponsored

[00:06:05] Deborah: think so. And yeah, quite a bit of apple juice apparently.

And, you know, I can tell you from first hand experience, those diapers do indeed

[00:06:13] Sani: they do hold a lot

[00:06:14] Deborah: apple juice or

[00:06:16] Sani: Now, how do we use that on a website? That is the question. My experience with CRO and yeah, anyone who has started doing CRO, I don't know, let's say more than six, seven years ago, at some point you realize that the way I look at the websites, the way I look at why this is broken. It's a thing.

Like there are other people who do that because CRO is now, you know what it is. Everybody knows what it is. 15 years ago. Not really, like it was a thing, but it was more of a niche thing. So yeah, everyone, everyone has that kind of, okay, this can be a profession. This can be a job. And there are other aliens just like me who look from, from the other side of everything that's broken, basically.

That's interesting. But yeah, the diaper, uh, I love that story. I really liked that story and let's get to the main topic. Actually, before we get to the main topic, let's talk about guest test. It's, it's a great resource, uh, for, well, why don't you explain it? I mean, you're, you're the

[00:07:16] Deborah: Yeah. So it's a mark, a digital marketing resource. especially for experimenters and A B testers who are looking for inspiration for their test ideas to validate test ideas and for case study evidence that shows what tends to work and what tends to not work with conversion rate optimization. And so it's a repository of hundreds of A B test case studies where you can go and take your best guess to see which test you think won, see if you got the right answer or not, so validate your, you know, hypotheses.

And then get the real life results, as well as an analysis and detailed test ideas to tell you how to actually take what other people have done. And not only, you know, use it and apply it, but also optimize on it. So it provides a lot of really great ideas, and for me, because I've been doing it for so long, I've formulated all these ideas in my head, and I'm able to apply a lot of what I've learned from these case studies to clients and say, okay, well, this tends to work.

Let's try this as our first start. This tends to not work. Let's veer away from this pattern and that kind of thing. And optimizers can do the same thing by using guess the test.

[00:08:27] Sani: absolutely can. And one really important thing to say is these are not, it will work for every single, these are, these are. Use it as a starting point. Use it to get inspiration to, to try to like, like you said, test your knowledge and test what you think about the website, but definitely, and absolutely do not just copy and expect miracles because, well, that's not experimentation

[00:08:48] Deborah: No. There's, there's a lot of contention around whether you should copy your competitors or not. Some people say absolutely not. I say absolutely you should. However, and it's a big however, make sure that you're testing and make sure that you're optimizing on it. Because every website and every audience is different and if you just point blank copy and try and transfer it over, it likely won't work for you.

Maybe it will, but it likely won't. But if you test, if you refine, if you kind of tweak for your own audience and how it's going to work for you and your parameters on your website, and optimize upon it by taking case study knowledge and making it even better, then it's likely to work for you.

[00:09:26] Sani: that that's exactly, I mean, no one can disagree with that. My thing always has been. whatever you're doing, be intentional about why you're doing it. So if you're copying, you need to know, I want to copy. And then based on that, I want to learn, don't just copy it because it's there. And this is the way I'm supposed to do it.

And this goes for, I don't know, using an e commerce platform that has a certain checkout flow. Yeah, sure. It's there and it works for a lot of people, but be intentional about using it for specific website that you're running. So. Yes. I'm, I'm glad we agree on that. And now let's talk about the perfect pricing formula, which just sounds magical and sounds like it will solve every single problem you have.

And it is from your book, which I will link to in the description. Uh, you need a guest to test subscription, right? To, to get

[00:10:13] Deborah: You do. If you're a Pro member, so, uh, you can sign up for free to guess the test and you get the free test that comes to you in the newsletter. But if you sign up as a Pro member, you get access to the entire website, hundreds of tests, lots of articles and resources, and the Pricing eBook, which is a 79 page guide, which spells out everything.

Everything you need to know about pricing psychology. I think it's one of my best works, and I'm really proud of it. And in it, I'm giving away the creme de la creme right here, which is the ultimate pricing table formula. So this comes from many case studies, hours and hours and hours of research, and putting it all together in a concise way.

And what I found is that if you anchor prices, and we're going to have to talk about that so people know what that means, but if you anchor prices from highest to lowest, if you present a decoy option, we're going to talk about that in a second as well, to ease choice selection, and if you limit product features to three, three is really the magic number, and in fact I just saw a post about that yesterday, and we'll talk more about that in a second, if you do those three things, And I'll explain them in more depth.

Then you have the absolute perfect pricing table that you can then present in your pricing chart options when you, um, want to say, you know, you know, buy this product. Here's my pricing chart. Here's my pricing table. So, why don't we go into the first

[00:11:35] Sani: Let's go. Let's talk about anchoring. Exactly. So what is anchoring effect?

[00:11:39] Deborah: Okay, so anchoring effect is really interesting.

So if you envision an anchor that goes from a boat into the ocean, an anchor kind of pulls that boat down and it keeps that boat down. Well, when you anchor your prices, what you're doing is you're setting the reference point, or you're setting the place in which you're going to put your price as the first impression that people have.

So if we go back to the boat analogy, it's kind of like the place in the sea that, you know, you're deciding to park your boat. Anchoring is the place in the pricing psychology chart you're planning to have your users come in and say, okay, this product is worth X amount of money. So if we go back to the Nike shoe examples, we're saying Nike shoes are worth 12, 000, for example.

[00:12:27] Sani: Spoiler, they're not.

[00:12:29] Deborah: It can be to some

[00:12:30] Sani: I know.

[00:12:32] Deborah: Um, so let's, let's just choose a product or service. Uh, we're saying it's worth 500. Now, in a pricing chart, usually what you'll see is you'll see, you know, an annual and a monthly subscription option. And then you'll see usually three to four different pricing options. And typically what happens is pricing charts will start at the lowest option and then they'll increase higher.

for each, uh, subscription or product offer that they, they have, and that is the opposite of anchoring. With anchoring, what you actually do is you set the reference point highest in your first presentation of the price, and everything else is comparatively lower. And the reason why you do that, and that works, test it, but the reason why it can work very well is because when a user comes Our eyes, and we know this from eye tracking technology, our eyes tend to see the things on the left side of the screen first, and then we bolt across or we scan across to the right side of the page.

And so when you enter a pricing chart, and you see the highest point on the left, that's the first thing you see. And you go, okay, this product is great. 500. Everything presented after, if it's cheaper, looks comparatively less and it looks like a comparatively good deal. So you set the reference point. You say, yes, this product is worth 500 and now, oh wow, I can get a great deal for only 350.

in the next price, or, oh wow, this one's only 150. I'm going to go for that one. When you flip it, as almost all websites do, and you have 150, 350, 500, then the reference point is 150, and now that 500 price tag seems very expensive and almost unattainable. So When you anchor the price, you set the reference point high, everything else is comparatively lower, and it seems like a comparatively good deal when you have the lower prices.

So, as a testing idea, I encourage Every website owner out there, or if you're working for clients, if you have a pricing chart, as most websites do, try flipping your pricing chart around so the highest price is first and the lowest price is presented last in your pricing chart. That simple change alone, that's all you have to do, it can massively increase your revenue.

Now, I've tested this SaaS clients, um, and I have some case study evidence on Guess the Test, and I've also worked with Chase. Jacob, I think I'm probably not saying his name right, so I apologize in advance, but Jakub Lunewski from GoodUI, he has several pricing patterns as well, and I've worked with him on consolidating the evidence.

What we together have found is that, uh, anchoring your price can actually lower your, uh, overall sales, so you're going to sell less, however, your revenue per user, or your average revenue per user, is going to go up. And so, when you, you know, test, you have to think about these key performance indicators and these metrics, and it's really important to not just look at one in isolation, because you could be really doing yourself a disservice.

You want to look at kind of the overall picture, and as long as ultimately revenue is increasing, then you're doing the right thing. It looked like you were going to say something.

[00:15:59] Sani: Like you said, it's not just about the conversion rate. That's exactly what I wanted to say. But also it's not about the average order value. It's about lifetime value as well. Because those high ticket customers are probably going to stick longer with you if the product fits their needs. While someone who goes for the cheapest plan, they're The, the least expensive plan, let's not call it cheap, is probably going to, it's likely that they're going to try and maybe decide, okay, we cannot even afford this one, we're just going to stop the subscription after one month, especially for SaaS, uh, customers.

Products and clients. That's very good. Uh, another question for you. Does this, does anchoring happen offsite as well? So for example, if you have a celebrity or social media influencer endorsements, can they set up that, that anchor in, in users minds before they even come to your website? So then you can start with an even higher price than you would otherwise.

[00:16:52] Deborah: Absolutely. Yeah. So I think that, you know, you can have a celebrity endorsement. I'm just going to go with Nike shoes and a famous example of Michael Jordan, who just absolutely boosted the value of Nike shoes and Air Jordans. Um, you know, he comes in, he says, this is a great product. Be like me, wear it.

You'll be an amazing basketball player. And all these people watching that commercial or. You know, the movie on Nike shoes say, yeah, I want to be like that. I will pay anything to be a basketball star like that. And so the perceived value, which is what we talked about at the beginning, the perceived value goes incredibly immensely up because the product is deemed to be worth a lot.

And so now all of a sudden, 1, 200 shoes look cheap. And when you see 500 shoes next to the 1, 200 shoes, you go, Oh, wow, that's a comparatively great deal. And you've just anchored the price. One of the easiest things that marketers can do to create price anchoring, and it's a very, very easy tactic, is you can set in a pricing chart the quote, real price, and strike it through, and then have the quote, sale price, directly underneath.

And we see that in a lot of, you know, on a lot of websites, a lot of pricing charts. It's a very common and popular use tactic now, but it's because it does really work because even still today is trained as we are and as aware of it as we may be, there's still something in us that goes, Oh wow, that used to be, you know, 50 and now I get it for 30 bonus.

And even if it's not really true, it's a great psychological principle that marketers can use.

[00:18:25] Sani: Right. Especially for first time visitor of the website who hasn't seen that it's always been on sale, quote unquote. And it's always been, I mean, Shopify has that feature, uh, compare at price, right, where you can put the price that's going to get crossed through and, and seen as, as the more expensive one for every product.

So I guess it makes sense. I guess there's

[00:18:45] Deborah: And then some, some great things to test with that because it's, it's so open to testing once you try a tactic like that. What color should the strikethrough price be? How bold should the strikethrough price be? Should it be larger or smaller than the quote sale price? Where should it be placed?

Should you have a little bubble that says save? You know, whatever it is, 25%. Should you put it as a percentage or should you put it as a dollar amount? These are all things to consider and to test. And there's principles that suggest certain things that you can do. I'm a great researcher, Nick Kalinda.

He's done a lot of research on pricing psychology. And a lot of what I've learned actually is taken from him. So he's a huge source of inspiration for me. And then what I've done is applied case study evidence to, you know, sort of expand on his research. But he shows that. There are studies that he kind of has cited that show the smaller the price, the smaller it actually seems to the user.

The bigger the price in terms of how it's shown on the screen, displayed on the screen, the bigger the amount seems. And prices that are lower to the bottom of the screen feel heavier, they drag you down more, whereas prices placed above feel lighter and, like, bigger. They're less amount of money. And, uh, if you use all those principles and then you combine it with boldness or colors, then you can have different effects on the psychology of how the price itself is actually perceived.

And, um, as a good rule of thumb, anything over, uh, I'm saying this off the cuff and I want to make sure I'm saying it right, but there's a principle for, uh, at a certain price point. It looks better or bigger to have a percentage, and at another price point it looks better to actually present the dollar amount.

I'd have to go back to my notes and see exactly what that is, but there's sort of this break even point where at one point the bigger savings is a percentage, and at one point the bigger savings is presented as a dollar amount.

[00:20:45] Sani: That is fascinating. It's

[00:20:46] Deborah: playing with all those

[00:20:47] Sani: brain. Yeah, but test everything. Like I said,

[00:20:50] Deborah: absolutely.

[00:20:51] Sani: all the time, because even if it works for most stores that, you know, put a percentage, if it's, let's say above a hundred dollars, not saying that's a number, maybe it's not going to work for you. So just make sure to test it.

The second effect, it kind of goes hand in hand with the anchor effect, right? The decoy effect. And, uh, how is it different?

[00:21:11] Deborah: Okay. So the decoy effect we can think of as popcorn in a movie theater. So if you ever go to the movies and you buy popcorn, you'll notice they have a small size, a medium size and a large size. Now, really what they should do is present the large size first and then, uh, cause it's most expensive and then the medium and small, but usually People think of it as small, medium, large.

Now the small, let's just say arbitrarily it's 5. The medium is 7. 50, and the large is 8. Which popcorn would you choose?

[00:21:47] Sani: I don't eat popcorn, but I mean, the only answer that makes sense is the large one, right?

[00:21:52] Deborah: got it, exactly. And so what has happened here is the middle one, the one for 7. 50, is what's called the decoy. It's the one that. You know, why on earth would I get a medium for 7. 50 when I can pay 50 cents more and get, you know, half, three quarters more and, uh, get the large popcorn. And so what happens is the decoy allows us to pinpoint an option, get our decision making juices flowing, and immediately eliminate it.

Boom. I don't want the middle one. It's not good value. Now I only have to decide between the small and the large. Well, do I want a lot of popcorn or a little bit of popcorn? Well, for a little bit more money, I can get a large popcorn. Maybe I'll pack it up and take it home. And so that whole process, you've made several conversion decisions at the movie theater, but the initial conversion decision was eliminating an option.

And In eliminating the option, you are now given the freedom to easily choose between version A and version B. And it made it much more easy to go to version B. And so decoys are set up to actually get you to eliminate the least valuable or least enticing option. And in doing so, then you can easily move on.

You're already in the conversion mode at this point. You've taken the first step of action. to eliminate the decision and now you can take more action to actually make that final purchase decision. So they're incredibly valuable at getting people to move into action and actually convert.

[00:23:31] Sani: You know what I think? I think the movie theaters don't even stock the medium sized boxes at all. Just because of what you just, what you said there. Because obviously, who would want that? Who would want like a And yes, it eliminates one choice, leaving with two, but also it makes one sound good. You're right.

Compared to something that's not even real, which is just a beautiful psychological play on, on, on the buyer's mind and, and they're probably in a hurry to get to the movie and there's a line and whatnot. So, you know, just getting, just keep speeding up that decision and making it seem good. It's brilliant.

So, uh, let's say, uh, and it's usually the middle option, right? The, the, the decoy or not always.

[00:24:15] Deborah: It can be presented different ways. Often what we see on pricing tables is that um, companies try and steer the user towards the middle option and then what they'll do is they'll use some kind of visual cue like best value or, you know, something that orients the user to choose this option in the middle and it's done through banners, through arrows, through making it bolder, bigger on the pricing chart.

those kinds of visual things that make you go, Oh, I noticed this one. This is the one I should go for. Uh, but it doesn't always have to be the middle option. It can be the bigger option or it can be the smaller option. Sometimes a really great thing to do is to set your reference price really, really high.

I've done this actually with a client that is offering coaching sessions, and he has a course and he has a book and he wants to sell co coaching sessions, but he wants a lot of money for it. And so he said, okay, well, you know, if I can get some great, but that's not primarily what I'm trying to sell. I really wanna sell the course.

And then secondarily the book, so let's put the coaching sessions on there as an option. We'll price them at this exorbitant amount. If I sell them, awesome. And if I don't, that's okay, because I've got people eliminating one option and now choosing between the two products that, you know, are more feasible and more tangible.

And so you can use it in any way. But if you set the reference price as the anchor, sorry, as the decoy, and you anchor it, then you'll probably have that one really high option eliminated, and you'll get people. Choosing between your lower product values.

[00:25:49] Sani: Right. And whatever is left or not eliminated, like I said earlier. It sounds like better than something, which is better than the starting point of, I don't know anything about these options, even if it's a bad option on its own, it's better than something else that's on that page. So I love it. I really like that.

Now the, the last component of, of a perfect pricing formula, it's a combination of two paradox of choice. And then there's something that you call, and I love this three charms, four alarms. So what is that about and how does that help?

[00:26:21] Deborah: Yeah, so it's sort of two different concepts that really meld together into one. So the paradox of choice is basically it says if you have too much choice, it's going to cause analysis paralysis for people and they won't be able to decide. And so we've seen this again and again in different studies, but the most famous is what's known as the jam tasting study.

And in it, uh, researchers had a, two different stations at a supermarket. And at one station, they had 24 jams, 24 different flavors of jams. Very enticing. And at another, they had just six jams. Now, are you familiar with this study?

[00:26:58] Sani: Yep.

[00:26:58] Deborah: Okay. So, uh, do

[00:27:00] Sani: But I'm sure there are listeners who haven't heard it, of course.

[00:27:03] Deborah: Okay. All right. So, at the station with 24 jams, Do you remember what happened?

[00:27:09] Sani: Uh, it, there's too many to choose from and why am I even going to bother and spend time and, and force a decision on myself and they just walk away.

[00:27:17] Deborah: You got it. So 60 percent of shoppers stopped. They said, Ooh, jam, yum, yum, yum. I'm going to try a free sample. On average, two flavors were sampled, but only 3 percent of shoppers bought jam from the the table with 24 jams. At the station with 6 jams, just 40 percent of shoppers stopped, so quite a few less stoppers were, shoppers were enticed by the selection, but when they were there, two jams were sampled on average, so same as the one with all 24 jams, and 30 percent bought jams instead of just 3%, so we 10x'ed it simply by having less selection, and What this shows us is that it's just overwhelming to make too many decisions and I'm sure you've experienced a grocery shopping if you're looking for, I don't know, pasta, for example, and there's, you know, 15 different types and you're like, okay, well, I want gluten free, but now I have to choose, should I go with this brand, or this brand, or this brand, or this brand, or this shape, or this shape.

It's overwhelming. And when we're on a website and we have limited choices, cognitive facilities anyway, because there's kids screaming in the background or we're on a bus on our mobile phone. We don't have the ability to make these decisions. It causes analysis paralysis, and so the only decision we decide to make is to make no decision at all, and we leave the site.

And so, So, experimenters really do themselves a service when they actually limit options and limit the number of choices that the user has to make. And so what research shows is that, at least in persuasive claims, and I think we can extrapolate the same idea into pricing tables and, um, you know, pricing psychology in itself, in persuasive claims, anything more than four persuasive claims actually alarms the visitor.

It sets off these alarm bells in their head that makes them go, Hey, wait a minute. They're making this product sound really good. Can I actually trust this product? And you sort of start to become skeptical of it. But when just three persuasive claims are presented, then you go, Yeah, I can buy into this.

This sounds really good. And so the way you can remember that is three charms. and four or more alarms. And so what that indicates, and of course you have to test it, but it indicates that when you present three, three persuasive claims, three pricing chart options, three unique selling propositions, then you can really capture your visitors because number one they don't have to filter through so many different options and number two three really does seem to be a magic number when it comes to offering choice and when it comes to offering persuasive claims that will really motivate users to purchase your product or service.

[00:30:13] Sani: Is there any reason why it's number three specifically?

[00:30:17] Deborah: Uh, it just seems to be a really powerful number. I think it's because it's, it does provide us that opportunity for decoy and, you know, we can eliminate one thing really easily, or we can build on one thing really easily. And it provides a perceived. sense of choice. So humans are really motivated by perceived choice, by having the option to choose.

Um, we will even go for a take it or leave it kind of thing, which is known as Hobson's choice effect, where, you know, you, you get one choice and that's it. And, That's okay, but people prefer the sense of having a little bit more choice to the point where they don't want too much choice because then it's overwhelming.

And so, within that boundary of absolutely no choice at all, all the way to infinite choice, people seem to prefer that limited spectrum of about three. That seems to be the magic number. Now, again, always test. It's not going to work for every website in every situation. But, You know, it can be really helpful.

So, as an example, for, you know, my kids, when I'm trying to get them to do something, um, you know, do you want pizza, pasta, or grilled cheese for dinner? And they're immediately able to say, no, not this one, and then they can decide between two of them.

[00:31:43] Sani: Good strategy. But my strategy for dinner is we're having this for dinner. Period.

[00:31:49] Deborah: that's a much better strategy because I've ended up actually opening my own restaurant at home called Mama Mia's, where I cook this for this person, this for this person. It's become ridiculous.

[00:32:01] Sani: One more

[00:32:02] Deborah: So no choice

[00:32:03] Sani: no choice

[00:32:04] Deborah: best for dinner.

[00:32:05] Sani: One question about paradox of choice and the jam study. Let's, let's go back to that. For example, how much of it do you think is? Coming from the fact that they don't know what to choose versus they don't know what to say no to. So if you buy one flavor or one jam, you need to basically know that there's these 23 others.

I don't want them. And there's going to be something that you are, you want to try there. Right. So is it, is it also that as part of the paradox

[00:32:33] Deborah: It probably is. Yes, absolutely. I think that's a really great point. And I think the two play into each other because you get to a certain point where like, well, I know I want that, but I also know I don't want to spend too much money on jam. So you still have to make a decision. Am I going to buy? Six jams.

I'm going to buy this one because I want to try it. You know, and so all these decisions come into play. And depending on how many kids you have yanking at you in the grocery store saying, Mom, come on, let's go. You may not be able to decide on the apricot jam or the strawberry jam. Even if you really want to try the blackberry jam, you say you're so distracted that you can't really even make that choice.

And so presenting Limited options make it much easier because you can decide in your mind, okay, I'm going to try and buy one jam. Now, which one is it going to be? And then you have the kids yanking at you, Mom, come on. And you say, well, I'm going to buy the Blackberry because there's only three options there.

So limited choice really reduces the cognitive load and makes the decision making process easier. And, you know, we can put that same situation into a website where you're, you know, you're making dinner, you have water boiling, and you need to run just a second. Oh, I'll buy that. Okay. And then you, you go off to do what you want to do.

[00:33:52] Sani: make it easy for the person making the decision basically is, is what this principle is all about. Just, if you, if you need to spend five minutes picking a jam, you'll get it next time. I mean, you'll get it next time and then you're never going to buy that jam. Uh, yeah. This is super interesting. Now we have the perfect pricing plan formula basically outlined in this episode.

So the anchoring effect, I'm just recapping here, the decoy effect and paradox of choice and three chumps, four alarms. If you do that, also, if you subscribe to get guests to test and get the book and read the entire 79 page book that Deborah has written, I think you'll be. Well equipped to set your pricing accordingly and, and, and not to lose it, but always keep testing.

Of course. So Deborah, uh, before I thank you for being the guest, what's the best be the best way for people to get in touch with you and, uh, to subscribe to guest to test.

[00:34:46] Deborah: Yeah. So I'm always on LinkedIn. So definitely reach out on LinkedIn, Debra O'Malley, and you can go to Guess the Test. It's www. guess, g u e s s, the test. And you can just hit the free newsletter subscription button, or if you want access to the ebook and hundreds of A B test case studies, plus all other resources, you can become a Pro Member.

And if you go to the Pro Member Pricing Chart, you'll see many of these principles implemented in it. I've tested different things. I've tested anchoring. I've tested not anchoring. I have tested, uh, strikethrough prices, all these kinds of things. Um, and the Pricing Chart is available. Where it's at right now, in part, because I don't have the best developer, and I'm not always able to get exactly what I want developed, um, but it's gone through many iterations and wireframes, and, uh, if you look at the pricing chart, the one thing that I do want to change in the future for it is I want to move the call to action buttons in the pricing chart actually above the fold.

Right now, they appear below the fold, and I think they need to go above the fold, but all the other elements have been tested and iterated on over time. So you can use the pricing chart to kind of inspire your own ideas for pricing.

[00:36:02] Sani: Everything's there for a reason is what you're saying is what I'm hearing here.

[00:36:05] Deborah: Yes,

[00:36:06] Sani: So thank you for being a guest. I did, I did your show a few weeks ago. I lost there. Famously lost to

[00:36:12] Deborah: You were close.

[00:36:13] Sani: I was very close and I almost won, but I was too honest to take that win, but, uh, it was a huge pleasure to have you on this podcast.

And of course we'll stay in touch on LinkedIn, uh, to everyone who connects with Deborah on LinkedIn, just keep an eye on, can you guess the test? It's once a month, right? And. It's the most fun CRO show in existence, I think, globally ever in history. Currently, maybe the only one, but it is an amazing, amazing, uh, show that I, I recommend everyone try.

And to everyone listening and learning about how to set up the perfect price and how to use the perfect pricing plan formula, uh, I want to thank you. And I will ask you to consider rating, reviewing and sharing this episode. And I will talk to you next week.