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Psychology and Price

Show Notes: September 11, 2021

  • A “nanogenerator” was created by Swiss researchers. It’s flooring coated with nanocrystals that produces electricity when you step on it.
  • And The FTC is looking into why McDonald’s ice cream machines are always out of order. And this page informs you whether your local machine is up and running.
  • For today’s segment of “Did you know” Did you know that there is an aquarium elevator in Germany? It’s called the Aquadom in Berlin.

Today’s main story is about price and psychology.

Free is simply another form of price, but it’s a particularly strong one.
People go crazy when they hear something is free. Do you have a box at home with free stuff you’ve collected over the years that you never use but keep? Or do you typically take advantage of the “buy one, get one free” offer when it’s available to you?

Free, according to Dan Ariely, is an extremely emotional trigger, but it’s just another price – the cost of nothing.

The difference between $0 and even as little as $0.01 is significant. When Dan conducted a study in which individuals were invited to purchase a Lindt truffle for $0.26 or a Hershey’s kiss for $0.01, the groups were equally divided (40% each of the chocolates, with 20% of people buying nothing. When they reduced the price of both items by one penny, making the truffle $0.25 but the Hershey’s kisses $0.00 (meaning them to be free), 90% decided to purchase the Hershey’s kisses rather than the truffle, despite the fact that both were identical in reduction of cost.

This is due to our deeply entrenched impulse to avoid losses at all costs. We lose money if we purchase something and it turns out to be horrible. The potential danger of obtaining something for free, on the other hand, is zero. It might still be beneficial to us, so we place a higher value on free items than is deserved. Moral of this story. Try to offer something for free, perhaps even Free samples.

Today I want to recognize our small business owner of the week. It’s Norwood Clark from Uncle Darrows. Darrow’s New Orleans Grill brings classic cajun cuisine to the Carson community. I have been there many times and it’s delicious. This Saturday the 11th, they will be working with Re-Unite America to support the Hurricane Ida Recovery Fund. It will be from 2pm-5pm. I’ll have the address in the show notes. Thank you and I’ll see you next time.