We want to share with you a good example of a pricing strategy called "Compromise Effect" that generated millions of dollars of sales for a well-known brand in the US called 'Dollar Shave Club'.

Dollar Shave Club is a subscription-based company for razor blades! Imagine 'Netflix but for razor blades'!

Interesting, right?

Looking at their pricing, they sure do have a $1 razor which is called 'The Humble Twin'. Hence, the name 'Dollar Shave Club'.

But, here's what's amazing...

Guess which of these bundles generated a major part of their revenues.

It's 'The 4X' bundle worth $6!

That's 6X higher than the $1 offer, which originally is Dollar Shave Club's value proposition!

You might be wondering... how did that happen?

A part of it is due to marketing psychology which follows the 'compromise effect'.

This is where consumers think about the best solution/offer for them by comparing offers available.

Looking at the $1 offer, consumers may think -- "This is too cheap and may not have the quality I need."

However, when they look at "The Executive", they may think -- "$9 for a razor? Are you kidding me?"

That thought process will eventually make them choose 'unconsciously' the $6 offer which is most likely to be most cost-effective for them!

So, what can we learn from this example?

When pricing a product or service, you may want to consider providing your customers with 3 options that they can compare with each other.

In this way, you are able to guide their decision making into what will benefit you the most in terms of profits and which will benefit your consumer in terms of value!

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Original Post: https://www.facebook.com/paretoph/photos/a.101217541372602/188745089286513/?type=3&theater