The price is right

A friend who offered German lessons for free told me about how people didn’t take his lessons seriously. But when he charged a fee for the same lessons, they were more engaged. They also left him better reviews.

Several studies have confirmed this effect. When a placebo was offered as a painkiller, but patients were told that it was expensive, it was more effective than when they were told that it was cheap. When energy drinks at a gym were sold at half-price, they were not as effective – people exercised less and felt more tired.

When we buy a product, we often buy the story of the product in our minds. And to a degree, putting a higher price on a product improves its story. Getting it for a bargain undermines its story.

When we buy an excellent product, we are better off paying full price. When we sell an excellent product at the high price it deserves, we are also helping our customers better appreciate it.

Source: Dan Ariely