Katie McPhee is a marketing leader with over 12 years of experience across the events industry. She is passionate about accelerating growth by shifting perceptions and in the third part of this series you can learn how to level up your pricing strategy with 3 essential behavioural science concepts.
Behavioural science seeks to understand how people behave – including decision making processes; memory; and emotions – and identifies cognitive biases – or mental shortcuts – which our brains make to simplify the world around us. Within behavioural science, behavioural economics is a more refined set of principles which refer more specifically to people’s economic decision making. Also within behavioural science is the study of behaviour change, consisting of frameworks and interventions to deliver the desired behaviour.
Examples of all these disciplines can be seen across our everyday lives – from city planning, to public health interventions – to product design, advertising and marketing – and whether we realise it or not, they heavily influence how we think and act. In this series you can learn how to harness behavioural science as you build your community and deliver events. From event concept to promotion strategy, targeted nudges can change how your audience behaves, helping you to build community and sell more tickets.
3 Behavioural Science Concepts to Level up Your Pricing Strategy
With changing consumer demands, an uncertain economy, and increasing competition, there are many considerations that go into a pricing strategy. You can use behavioral insights to better understand what drives decision making.
1. Price signaling
Pricing sends a message to customers about product quality: this is known as price signaling. So if something is more expensive, in certain instances, people will assume it’s superior. These instances will include when consumers don’t have very detailed knowledge about what’s being sold, so will consider price itself an indicator of quality. Apple’s pricing is a good example of price signaling in action. Applying signaling will be most relevant if you’re aiming to deliver a premium event experience. In this case, thorough research in your category to understand what ‘premium’ looks like from both a pricing, marketing and an event experience standpoint, will help position your event at the high end of your category and priced accordingly.
Concept to action
For Seed Talks, pricing their events at a rate comparable to a cinema ticket (£10-£15) has been part of their strategy in building an event brand that is highly regarded for it’s quality content. Seed Talks founder William says, “When our attendees pay to come to one of our events they know they are learning from a world class thinker: we offer access to verified experts with excellent credentials. Our ticket price reflects this but it is still budget friendly.”
2. Scarcity
Cialdini’s scarcity principle states that opportunities seem more valuable to us when they are less available. We see this in play with the ‘limited number’ tactic when we’re told a product is in short supply – or that the waiting list is open for a soon to launch service. It aligns with Kahneman and Tversky’s loss aversion bias research which observes that humans feel the pain of a loss twice as much as the equivalent pleasure of a gain. When we believe something we want is scarce, we can experience a strong desire to obtain it.
Concept to action
Communicating ticket warnings when tickets are running low or when early birds are coming to an end are a classic and effective use of the scarcity principle. Using this as a hook in an email subject line or instagram post is also likely to trigger a response amongst your attendees. The use of ‘Flash Sales’ or timebound discounts can be another route to apply scarcity to drive buyer action.
3.The power of free
Dan Ariely, a prominent behavioural scientist and author of ‘Predictably Irrational’, identified that anything free is hugely motivating and attractive to us – and that people tend to value something if it’s free more than they would otherwise. This has been put down to what psychologists call the ‘affect heuristic’. Free products make people happier – and happiness affects people’s decision making. This is visible in the experiment Ariely and his colleagues set up, where they put two bins of chocolates (Hersheys and Lindt Truffles) in an MIT cafeteria next to the cashiers. They varied the prices to test how people responded, and when the Hersheys chocolate was reduced to $ compared with $0.13 for a Lindt chocolate, double the number of participants chose the Hersheys. They also rated the chocolate after consuming it – Hershey’s ratings went up, when it was obtained for free.
Concept to action
Free is compelling and makes people happy. Is there anything you can you highlight as part of your event that may be framed as free – from a post-event resource, such as an e-book, to a goodie bag or welcome drink at the event? Even if you cost in this offering when setting your pricing, positioning this as free is likely to present a compelling offering for your attendees. Sarah, one of the creators of Wineknow, says:
“We now provide small bites at all our events to accompany the wine tasting. We didn’t do it initially but the positive feedback was overwhelmingly strong when we introduced this at the last event so it is now going to be a regular feature. It doesn’t add much to the overall budget but presents a genuine value add for our attendees.”
The ways your community engages with your offering and makes buying decisions centres around a set of behavioural patterns, some of which have been described here. Leveraging these as you plan your next event will help you build your community and present your concept and pricing in ways that are likely to strengthen your appeal and build your event brand. Missed part 1 and 2 of this series? Recap the exclusive tips to build your community and 4 concepts to level up your pricing strategy.
Feeling inspired and ready to put these concepts into action? Start planning and organising your next event with Eventbrite.
