Reframing Value, Bundling, and “Small”

03.07.2017 |

Episode #2 of the course Consumer behavior: Becoming an empowered consumer by Maureen McGuinness


In Lesson 1, we learned how we develop loyalty for a specific brand. That said, not all of us develop brand loyalty. Some of us have trained ourselves not to part with money unless it’s absolutely essential. Marketers refer to this group of customers as “tightwads.” Lesson 2 shows the techniques that marketers have developed to appeal to tightwad customers and encourage them to part with their closely held cash.


Reframing Value

Have you ever joined a gym? Did you sign up for a year-long membership? Go to any gym website and you’ll see a similar pattern when it comes to pricing.

Every membership pricing option shows the cost per month.

If you’re signing up to be a member for 12 months, why do you rarely see what the cost of your membership is in total? Because the high number could put you off.

If you are offered membership for $75 per month or $900 per year, you’ll often see the former offered. $900 per year is a scarily big amount, but it’s equivalent to $75 per month. Companies use incremental pricing to reframe the value of your purchase. Even though you’re essentially agreeing to pay $900 to the company (because you’re often signing up to a 12-month contract), the amount feels more affordable than only signing up for six months at a higher monthly cost (e.g., $100 per month).

Using monthly instalments encourages you to purchase for the following reasons:

1. Familiarity. We often get paid monthly. We pay our rent or mortgage monthly.

2. Manageable. Since the monthly amount is smaller, it may feel more affordable.

Tip: Before purchasing any subscription or membership, add up the total cost of your purchase to see whether you a) really can afford it and b) you think it is worth the total money you have committed to paying.



Similarly, memberships are rarely offering just one service. There will often be different packages to suit our needs. Since we feel some pain when making any purchase, if we have to pay for several different services separately, we feel too much pain and don’t continue with our purchase. Instead, companies package up their services that we can pay for in one easy transaction to create just one pain point. Bundling services into a package also means that the customer doesn’t have to think about whether they need each service to justify the purchase. They have only one price to consider.

Tip: Be clear on what your needs are before looking at package options and also decide on a maximum price you’d be willing to pay to have these needs addressed.


Making Prices “Small”

No matter what price something is offered at, you would think that adding a single word would not have a big impact on whether you buy something or not. A study by Carnegie Mellon University showed that one word is enough to convert customers. By adding the word “small” to a $5 fee, the study found that sales increased 20% among “tightwad” customers.

Tip: Remove any words placed near or next to a price so that you can consider the price in itself without being told whether it’s small or not.

Tomorrow, we’ll look at the other persuasive techniques that marketers find successful for converting those who browse to those who buy.


Recommended book

Cheap: The High Cost of Discount Culture by Ellen Ruppel Shell


Share with friends