The 'Rug Theory' - Higher priced items often sell first because price indicates quality
This is a pricing related story that my dad taught me when I was new to business.
He said, pretend I've given you two identical rugs, there’s not anything different about them. And you put 'em in your shop. You price one at $50 and you price one at $500.
The $500 one would probably sell first.
The reason is because most people can't tell the difference between a high quality rug and a low quality rug.
Of course, some people will, but the general rule of thumb is, the only people who really understand the value and time and energy and expenses that go into what people make or do are the people that make and do.
So consumers base their understanding of value often on the price (and they do this unconsciously), within milliseconds of seeing someone's price, people have made assumptions and judgments about what the value of that product or service is.
And in the case of rugs, many people would look at the $50 rug and think…
Oh, that's cheap.
That's gonna fall apart.
That's not gonna last very long.
That's not good.
And then they’d look at the $500 one and think…
Oh, that must be sturdy.
That's gonna last a long time.
That's a good investment. That's the one that I want.
Even though they are identical.
When you price yourself low, you are saying a lot more about what you offer, what you make, what you do more than, you know, and there's every chance that you're actually missing out on sales, by pricing yourself lower.
Want more pricing help??
I would love to help you more with your pricing because I have a LOT to say about it that completely transforms how you approach your pricing (because if you didn’t know, pricing is a HUGE part of your marketing strategy!!)
If you haven’t watched my free masterclass on all things pricing psychology yet, here’s the link!
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