The Perception of Unbundling – Where $1000 Becomes $10 a Day

August 25, 2011 by  Filed under: Marketing 

You might have heard of value bundling as a psychological pricing strategy, which is grouping several items together to create deals, need an example? Just look at almost any fast food restaurants like McDonald’s, KFC or Burger King…etc

Now, what about the opposite of bunching items together? Yes, there is indeed a pricing strategy for not using deals, the concept is called the perception of unbundling. You might be a little confused right now, but when I show you an example you’ll realize how effective and common you see this tactic used in the world.

The meaning of unbundling isn’t to unbundle a group of items, but to unbundle the price of a particular service or product to create a lower perceived price, for example:

– “For only five dollars each day, you will get a lifetime insurance”

– “For just 35 bucks each week for five weeks you can afford an iPhone”

They often use this technique to debt owners to make it sound a lot easier for them to return the loans, which kicks away a lot of pressure at the same time.

Unbundling prices is effective and does not cost any extra money to raise conversions which many other marketing campaigns require.

The whole concept of unbundling prices is really a mathematical trick that plays with numbers, in a psychological way, prices definitely sound better if broken down to smaller bits, contrary to something like: “for just $2635 a year, you will get a guaranteed lifetime insurance”.

How does this tactic work? There are actually two main factors:

#1) You have broken down the full price into bits of tiny prices.

#2) You will have tremendously shrunken the perceived value.

If you utilize the perception of unbundling, which is, breaking down a price into routine payments, you will almost instantly generate at least an extra 1/3 more orders, which means, more profits.

In fact, you could even develop the power of this pricing tactic by replacing the routine payments with low value items, for example instead of saying something like:

– For only $5 a day each month, you will get our exclusive weight loss advice.

Replace the five bucks with an item or two:

– For only a cup of cappuccino from Starbucks, you will get our exclusive weight loss advice.

By using an item as a replacement for the price, you’re even more exaggerating the perceived value of the price.

However, there are scenarios where you should never implement this tactic, which is if you sell high-end or luxury based products, you need maintain your brand reputation and credibility, it’s called prestige pricing.

About The Author:

Harrison warmly invites you to check out how you can utilize psychological pricing to increase sales up to a whopping 45% right now with little-known human psychological strategies. Learn more over at psychologicalpricing.net.

Article Source:
http://EzineArticles.com/?expert=Harrison_Li

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