2009.03.19 01:52:21

John McDaniel

The pricing of services and materials is often viewed as being extremely difficult and frustrating.  Even when a significant amount of analysis has gone into the pricing process the person doing the pricing is left with a sense of doubt regarding the results.  Pricing is a combination of art and science, without question.  In my experience, the scientific tools are seldom put to use in optometric practice.  The most common pricing theory I see in practice is the “I thought these prices would be easier to add up for the staff” theory.  This may shock you, but I am here to tell you that is not a recognized pricing theory.  The field of consumer behavior has given us a few general guidelines to be used when pricing.  While none of the guidelines will give you a formulaic answer that represents the “correct” price, they will help you get nearer to the “perfect” price and maximize the results of any pricing strategy.

The most basic of the pricing strategies is known as the odd-numbered pricing theory.  It is relatively simple as well.  It states that goods (products or services) priced with odd numbers will sell more than those priced with even numbers.  More specifically, the odd numbers need to occur in the proper places in the price.  The most impactful place to use odd numbers are the tens digit, the ones digit, and the one-hundredths digit.  In other words, use odd numbers where the X’s appear in the following price: $12,0XX.8X.  How well does this theory hold up?  Very, very well.  Why does this theory work?  There are several hypotheses but it is not clear exactly which one explains it.  It just works.

The next consumer behavior blog will discuss the round numbers theory and pricing.  I’ll expect to see you sitting on the edge of your seat.

Le Meas,

John McDaniel, OD, MLHR
President/Founder
Waugoo Consulting Group, LLC
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pricing theory | marketing | pricing | Consumer behavior