It has long been an accepted (widely-believed) axiom (rule; law) in the world of marketing (selling things to people) that you never ask people how much money they would pay to buy something. If you ask a group of consumers (buyers), “Would you pay $15 for this?” their answer may be “yes,” but when you actually try to sell it to them, they may not buy it.
Take (Consider; Think about) the example of concert (musical performances) tickets for famous rock stars and other singers. In many U.S. states, you can buy tickets for concerts through what is called a ticket broker, which is basically a company that buys tickets to concerts and sporting events and then resells them to people who want them but weren’t able to get tickets themselves. The price for these tickets can be very high.
For a recent concert by the singer Cher here in Los Angeles, one ticket broker was advertising (telling people they could buy) tickets for $385. Another was advertising the same kind of ticket for $409.
Which ticket would you buy?
Wait! Before you answer, here’s one other important piece of information: the ticket advertised for $385 has an additional (extra) charge you have to pay of $95.82 for a “service fee,” so the total cost of the ticket is $480.82. But you don’t learn about this until you have already started to buy the ticket online. The “real” price comes right before you enter in your credit card information on the website.
In comparison, the $409 ticket includes everything – there is no extra fee. You pay only $409. This is called “all-in pricing,” meaning the price includes everything, with no “surprises” when you go to pay.
Okay, now which one would you buy?
If you ask most people, they will tell you that “of course” they would buy the $409 ticket. But that’s not what actually happens. A lot of people will still buy the “$385” ticket, which actually costs a lot more.
You see, when you ask people if they want “all-in pricing,” almost everyone says “yes.” But when you then look to see what people actually do – in this case, which tickets people actually buy – it’s often the ticket which seems to have the lower price, even though in the end it is more expensive (costs more money).
There are a couple of possible reasons for this. First, people are used to “added fees” when buying tickets from ticket brokers, so even though one company may say that their price is “all inclusive” (includes all fees and taxes), people may not believe them.
Second, once you take the first step toward some goal (for example, clicking on the Buy button on a website), you are more likely to take the second step, and then the third, and so forth. Of course, you can stop at any time, and many of us do, but stopping means that we have to admit that we made a mistake to begin with, by taking the first step. We don’t like to admit we’re wrong, even if it costs us more money.
We have a saying in English, “Do as I say, not as I do,” meaning that you should follow my advice, do what I am telling you to do, and not what I actually do, since that may be very different.
Image credit: Ticket by Nick Levesque, The Noun Project