I was very surprised to see the review by Executive Book Summaries (I didn't realize they were reviewing me), Deb Micek gave me the heads up. I thought the review was very thorough and positive even though the reviewer missed one point when she indicated that I undermined my credibility by employing some of the techniques I wrote about in the book by recommending Moleskine notebooks and the Canon SD pocket camera.

My favorite line from the review: ". . . Subliminal Persuasion is a fascinating entree into the mysterious world of influence and internet marketing."

By recommending products like that in the book and employing the techniques I was describing, I wanted the reader to recognize what I was doing so they could see practical applications. There are many more there as well. Not being critical of the reviewer but I've heard that several times now and I wanted to clarify the purpose for you the reader. And, these ARE products that I use regularly.

Thank a million for the great review Elizabeth Corcoran of Executive Book Summaries!

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One of the questions I often get is why do sellers set prices ending in .97 or .95 or other specific pricing schemes and which is more effective. The answer is a little more complicated than they hope for but here it is.

When it comes to pricing people are often applying the rules of bartering internally. They are asking themselves if this item is actually worth x and if it isn't then how much should it be worth. In that determination of worth comes a decision about whether or not to purchase something.

To test these ideas University of Florida marketing professors Chris Janiszewski and Dan Uy tested whether or not some characteristic of the opening bid would influence the way the brain thinks about value and shapes bidding and buying behavior. They documented their research and findings in a paper called "Precision of Anchor Influences The Amount of Adjustment" published in the February 2008 Psychological Science journal.

Ultimately the question is are we more persuaded by something priced at $19.97 than a round $20.00?

Using a series of tests participants were asked to make an educated guess. For example, they had subjects think about a scenario in which they were buying a high definition plasma TV and asked to estimate the wholesale cost. The participants were told the retail price and given the additional information that the retailer had a reputation for being competitive in their pricing.

There were three scenarios that involved three different retail prices. One group of buyers was given a price of $5000.00, another $4988.00, and the third was given a price of $5012.00. The group given the price point of $5000 guessed much lower than the those who were given more precise prices, they moved further away from their mental anchor than those who were given more specific prices.

In order to test this in the real world they looked at real estate sales in one county in Florida for a five year period and compared listing prices with actual sale prices of homes. They found that sellers who listed their homes more specifically, say $495,500 rather than $500,000 consistently got closer to their asking price. Also, houses listed in round numbers lost more value if they sat on the market for a few months.

Understanding that competition is like an auction, I can get this product from you at X price and I can get it from that vendor for Y price makes pricing an important issue in the persuasion process. So, even when they generalize and say the price is $20.00, you should drive back with "Actually, $19.97." Setting the anchor and reinforcing it works in your favor.

Look at your pricing and see where you can set better anchors, then get started today.

Twenty Volunteers had their brains scanned using fMRI while they tasted what they believed were five different Cabernets, each with a different price. Reality was that there were only three different wines two of which were poured twice, once at a high price and once at a low price.

You've probably already guessed what happened right?

Yep.

The volunteers rated the wines according to their prices. Cheap wine tasted cheap and everyone's favorite was the most expensive.

Here is what is really interesting. The testers not only said they liked the wine more but the fMRI also showed an increase in the medial orbitofrontal cortex, an area of the brain that has been suggested may encode for pleasantness of experience.

According to Baba Shiv and Antonio Rangel of the California Institute of Technology who co-authored the study, (the previous link includes a video interview with Shiv) changing a marketing variable such as price can have a measurable effect on pleasure related brain activity.

Something as simple as a price change can have massive impact on the what people perceive. And, price can pre-condition the expectation. People have been conditioned to expect more out of something that costs more whether it is wine or a vacation or a hotel or a car.

In what ways can you leverage price and expectation to pre-condition your buyers to experience your product or service as being better?