Why You Need To Offer 3 Options On Your Pricing Page
I know one card trick and it’s a really easy one:
You spread a deck of card, faced down in front of your friend, holding all the cards at their lower tip so that your friend could see all the options in front of him and then you ask him to pick a card quickly.
After he does, you ask him to return the card. You shuffle a bit, do some hocus pocus and then you tell him what his card was without even looking at the deck.
How do you know his card?
Before you play the trick you choose a card, then, when you initially spread the cards in front of him, you need to make sure that the card you chose sticks out just a little bit.
When you pressure your friend to pick a card quickly “Pick now, do it already!”, he’s nervous, he wants to take a card quickly as instructed and do a good job, he doesn’t notice it, but he goes for the card that catches his eye – the one that sticks out.
This card trick has proven successful for me about 80% of the time. It really shouldn’t work so often, I mean – who chooses the card that sticks out when you know someone is playing a trick on you?!
But it does work because we are not, strictly speaking, rational people – we let others influence our actions more than we’d like and that’s also why having 3 options on your pricing page works. Let’s dive a little deeper into this:
Topics covered in this post:
- What an effective pricing page looks like
- Why having 3 pricing options shouldn’t work
- Why having 3 options does work
What an effective pricing page looks like
If you offer a consumer product or service that people can purchase online you probably have a pricing page describing the different pricing plans/ packages you offer.
In addition, you might have noticed (and very likely – have done so yourself as well) that even when there’s just one product sold on the site, the pricing page usually includes 3 pricing plans – one cheap, “light” variation of the offering, another that’s very expensive which also offers many additional benefits and an in-between options that looks like a combination of the two others.
This middle option is priced closer to the cheaper option than to the expensive one and usually has some visual indication that it’s the best option out of the three (a colorful blinking sign that says “Best price” and a big arrow pointing at option 2, for instance).
Before going into marketing you might have looked at a page like this with pure eyes – thinking that there are 3 options on the pricing page because the business is targeting three different market segments.
Or maybe you thought that ‘this is such a nice business, they don’t want to force a customer into buying something they don’t need so they’re offering options’.
But now you know better.
It’s not hard to guess that most people who purchase after visiting this page will go for option 2, the in-between option.
The expensive option might be chosen some of the time by those who value the additional benefits and have the means to pay more.
The super cheap option is merely a cannon fodders – just there to make option 2 look better by comparison.
[*If you find that on your on pricing page a large percent of customers choose the cheap option over option 2, that should tell you that you’ve done something wrong – either option 2 is priced too high or the additional benefits it offers don’t seem valuable enough by comparison (or both).]
So.. if option 2 is the one picked by the vast majority of customers, what’s the point of having options 1 and 3 any way?
Why not simply have just option 2 with no irrelevant alternatives available on the page and be done with it?
It’s the illusion of choice and the availability of something to compare it to that makes option 2 so appealing and that’s why you need all three.
Why shouldn’t this work
A rational person who lands on a pricing page with the intention of making a purchase should have a predetermined idea of why he/she is buying the product and what he/she values about it.
This person should not be swayed by fancy page design and manipulative marketing tactics and will choose the right pricing plan for him/her, regardless of what the business wants her to buy.
Most of us think we are this rational person – that when we have a need, we find the company that can fill that need and we choose the package that includes the benefits we care about.
We think we see through the bullshit and buy what we need.
The 3-option pricing page only works because we are not exactly rational thinkers – we are predictably irrational.
Why it does work
Dan Ariely who pretty much coined the term “Predictably irrational” in his 2010 book of the same name, gave a great example of this:
The 3-option pricing page works because our preferences are not as well defined as we might think, they are not always transitive.
Transitivity is a mathematical term that means that if A is larger than B and then we add C, which is smaller than B then A is still larger than B and C is not larger than A.
In other words, if when we have 2 options on the pricing page – our expensive option (let’s call it Option A) and our in-between option (option B) and people choose each of them just as much (A = B), if we add the cheap option to the page (=option C) it’s addition should not affect the relationship between A & B (some people might choose option C instead of option A or B but the amount of people who choose A should still be equal to B because nothing has changed for these options) but it does. Option C makes option B look better by comparison and so when option C is available more people choose option B than before and suddenly B > A.
That is not mathematically transitive but it is normal human behavior.
So next time you’re thinking about the design and layout of your pricing page, or any king of customer-facing page, remember their inherent irrationality and create an offering that gives the illusion of choice but influences their decisions at the same time.
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