Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The Psychology of Pricing: A Gigantic List of Strategies

nickkolenda.com

Post reply on HN
Print view View original

11–20 of 85 posts

Re: The Psychology of Pricing: A Gigantic List of Strategies

#11

Post by tikhonj »

copsarebastards wrote: post #5

This kind of stuff is a strong argument for communism. An immense amount of mental energy was squandered on creating this list (not Nick Kolenda, the people who studied these things). That same energy could have been spent on curing any number of psychological ailments, but instead it was spent on getting people to pay more for less. It's interesting, but as far as I'm concerned the energy was wasted.

If you want to organize resources and work in a centralized fashion, you still have to understand people, how they think and how they're motivated. You still have to decide who gets what, how they get it, who works on what, how to motivate them... You just do it directly instead of detouring through the abstraction of money and prices.

Getting rid of the intermediate pricing abstraction doesn't magically solve the underlying problems. Perhaps it lets you address those problems more directly, but it's not clear that that's a better approach—as programmers and computer sciences we should appreciate the power of abstraction and indirection to make solving problems easier.

The same energy would just have been spent in committees. Except, historically, the process would have ended up far more political than scientific.

Re: The Psychology of Pricing: A Gigantic List of Strategies

#12

Post by mbesto »

nkolenda wrote: post #10
mbesto wrote: post #9

Nick, this is extremely impressive and I applaud you for putting this together so concisely. Some comments: 1. Kahneman and Ariely both mention in their writings how their is a difference between free and even just 1 penny. Especially given how popular Freemium is I thought this might be a good topic for you to cover. (Ariely calls this "market norms" vs "social norms") 2. A common theme here on HN (mainly from peopl…

Thanks so much for the kind words. 1. I remember reading about that concept in Ariely's book. And I actually considered adding it to the list, but I wasn't sure where to incorporate it. 2. I think everything boils down to your ability to communicate the value of your offering. People will pay any amount, as long as they perceive to be getting more value from it. 3. And I can't believe I didn't mention Kahneman anywhe…

Re: point 1.

Maybe something like:

"Strategy: Giving away for free and then upsell"

Tactic X: "Give away free product or usage of your service" (talk about Ariely's theory of social norms vs market norms)

Tactic Y: "Up-sell free users into a more compelling value proposition" (distinguish between the free product/service and use it as a framing exercise to get your users to pay)

Re: The Psychology of Pricing: A Gigantic List of Strategies

#15

Post by buttchrist »

benhirashima wrote: post #14

Some of these tactics are contradictory. Tactic 2 says to add cents for a "rational" purchase, i.e. 19.86 verus 19. This contradicts tactic 3 which says to use fewer syllables, i.e. 19 versus 19.86. How do you prioritize these tactics?

A/B testing?

I assumed the longer syllables was part of the "rational" purchases, but it isn't really clear.

Re: The Psychology of Pricing: A Gigantic List of Strategies

#16

Post by [deleted] »

copsarebastards wrote: post #5

This kind of stuff is a strong argument for communism. An immense amount of mental energy was squandered on creating this list (not Nick Kolenda, the people who studied these things). That same energy could have been spent on curing any number of psychological ailments, but instead it was spent on getting people to pay more for less. It's interesting, but as far as I'm concerned the energy was wasted.

[deleted]

Re: The Psychology of Pricing: A Gigantic List of Strategies

#17

Post by tjradcliffe »

copsarebastards wrote: post #5

This kind of stuff is a strong argument for communism. An immense amount of mental energy was squandered on creating this list (not Nick Kolenda, the people who studied these things). That same energy could have been spent on curing any number of psychological ailments, but instead it was spent on getting people to pay more for less. It's interesting, but as far as I'm concerned the energy was wasted.

Translated: "That same energy could have been spent on something I care about and not what the author cares about."

Which kind of explains why communism always leads to tyranny: it is based on the essentially tyrannical assumption that communists alone have the knowledge to decide how everyone else should be spending thier time, and the moral authority to impose that judgement on others by force.

The problem is that no one has ever found a way of granting such power of central decision making in such a way that either:

a) central planners have access to the information and computing power distributed in the market such that they can make well-judged decisions even by the theoretically pure criteria they claim to be using (that is, communism is inefficient)

b) central planners have no incentive not to make decisions that serve their own interests to the detriment of all others (that is, communism is corrupt).

Given that theses results are incredibly robust and widely known, it is weird that anyone would suggest communism is an interesting alternative to anything. Reform capitalism all you want, but why bring up the political equivalent of a perpetual motion machine as the solution?

Re: The Psychology of Pricing: A Gigantic List of Strategies

#18

Post by soheil »

I also find this list fascinating, but I also agree with other commenters that energy is better spent educating people on these psychological pitfalls than to try to take advantage of them. If "do no evil" was ever a motto that a company believed in this would certainly qualify.

Re: The Psychology of Pricing: A Gigantic List of Strategies

#19

Post by k__ »

tjradcliffe wrote: post #17
copsarebastards wrote: post #5

This kind of stuff is a strong argument for communism. An immense amount of mental energy was squandered on creating this list (not Nick Kolenda, the people who studied these things). That same energy could have been spent on curing any number of psychological ailments, but instead it was spent on getting people to pay more for less. It's interesting, but as far as I'm concerned the energy was wasted.

Translated: "That same energy could have been spent on something I care about and not what the author cares about." Which kind of explains why communism always leads to tyranny: it is based on the essentially tyrannical assumption that communists alone have the knowledge to decide how everyone else should be spending thier time, and the moral authority to impose that judgement on others by force. The problem is that…

Translated: "I want people to make me think that prices are as low as they need to be."

Re: The Psychology of Pricing: A Gigantic List of Strategies

#20

Post by copsarebastards »

nkolenda wrote: post #8
copsarebastards wrote: post #5

This kind of stuff is a strong argument for communism. An immense amount of mental energy was squandered on creating this list (not Nick Kolenda, the people who studied these things). That same energy could have been spent on curing any number of psychological ailments, but instead it was spent on getting people to pay more for less. It's interesting, but as far as I'm concerned the energy was wasted.

I see where you're coming from. Hopefully I can defend some some of the researchers in that field :) Although most applications of that research are often applied to business and marketing, the underlying research has broader implications. For example, some of those studies progressed our understanding of cognition in general (the researchers merely used numbers in their study - which was then adapted for pricing app…

I agree with you, but the benefits of this kind of research have to be balanced with the harms as well. Rampant consumerism has driven environmental and economic damage, and while it's hard to weigh these kinds of benefits against these kinds of harms, my intuition is that if even a small percentage of the consumerism was caused by this research, the upsides far outweigh the downsides. Of course that's entirely subjective.
Post reply on HN