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The Goldilocks strategy

15 Dec

goldilocksGoldilocks and the Three Bears – the classic fairy tale about breaking and entering, and appropriately choosing a bowl of porridge and a bed. It can teach us about selling our woodwork.

No, we shouldn’t break and enter into our customer’s homes; the real lesson here is three choices – a good, better and best selection. It takes advantage of part of a potential customer’s psychological make-up. While shopping, people (myself included) usually buy the “better” labelled choice. It’s been shown that most people avoid the “best” category because they fear they are paying too much; conversely, they avoid the “good” choice because they feel it is too cheap, not very good quality; hence they tend to go with the “better” choice. So providing a middle choice is the crux of the good, better, best tactic.

So then, if you currently only offer two versions of a product – maybe it’s jewelry boxes – you should consider a third that has more features and a higher price. You are trying to steer your customer to the “better” choice, which of course, will have your greatest profit margin, putting more dollars in your pocket.

The procedure called “Goldilocks Pricing” is growing more common. So if you currently offer two versions of your product, the act of adding a third (more expensive higher margin) option will almost certainly increase your profitability because people will choose the middle price.

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1 Comment

Posted by on December 15, 2013 in BlogNotes

 

One response to “The Goldilocks strategy

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