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The Chocolate Experiment: Decrease Price by 1 Cent, Improve Preference 2.5x (And Other Tricks)

Lindt truffles & Hershey's Kisses

In Predictably Irrational, Duke University behavioral economist Dan Ariely wrote about his chocolate experiment that tested varying prices for Lindt truffles and Hershey’s Kisses.  When he dropped the Hershey Kiss’s price by a penny, its preference grew by 2.5x.  Yet when he increased the Lindt truffle’s price by a penny, its preference grew (!) by nearly the same rate.

In my work in the trade, a client increased price for a group of products from $0.99 to $1.00 — again, a penny’s difference.  This time, unit sales improved by 4x on average. Go figure.

You’ll probably recognize some of these techniques from your own work — and certainly from your own shopping.

I write about pricing tricks from the trade and academic pricing research in a new white paper, Tricks & Treatises: An Overview of Price Tools for Food, CPG, and Retail Practitioners.  It covers these stories as part of 8 topics.

From the trade:

  • Magic & toxic prices
  • Multiple pricing
  • Weight outs (or size decreases)
  • Line pricing

From academia:

  • Anchor pricing
  • Mental accounting
  • The value of “free”
  • Charm pricing

How do you think applying some of these practices would affect your topline?  Download the paper now.

Tricks & Treatises

 

Comments
  • thanks Scott – I couldn’t help thinking of Robert Cialdini (Influence) and people’s irrational reactions to pricing. I just downloaded your paper and am looking forward to reading it. on separate but related note, have you considered analyzing bagged candy at CVS? they must have become one of the biggest candy retailers and seem to be experimenting with multiple pricing/bundling tiers. all I know is that I end up buying more than I intend and I always end up realizing later that I didn’t actually get that great of a deal.

    • Hi Dick – great question! I’ve been tempted into many of those deals, too. I’d love to have the chance to see the back-end data and see the effects. I have to assume they are working well because I keep seeing those techniques used over and over again.

      Cialdini’s book is great – the best material I’ve ever read on negotiating.

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